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It takes time for the complete effects of monetary and fiscal policy to materialize. This is because there is ___________ between setting fiscal policy and seeing its effects.

User Notaceo
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Answer:

An impact lag.

Step-by-step explanation:

Impact lag is described as the period required for monetary or fiscal policies to show its full effect. These policies are primarily designed to smoothen the economic cycle as the government launches them as a corrective measure to respond to a shock and its consequence in the economy.

As per the question, the corrective monetary and fiscal policies take time to materialize and show the complete effects because there lies an 'impact lag' between the setting of these policies and showing its effects appropriately to stabilize the economy and overcome the shock.

User Ahmadreza
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