Why is the inside lag for monetary policy shorter than for fiscal policy?
a. Congress and the President can act quickly to change monetary policy.
b. The Federal Open Market Committee must get Congressional approval.
c. It can take a long time for new government spending to take effect.
d. The Federal Open Market Committee can act almost immediately.
Answer: D. The Federal Open Market Committee can act almost immediately
The inside lag for monetary policy is shorter than the fiscal policy simply because there is an available data on inflation and even employment rate therefore the federal can make decisions instantly based on the available data.
