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Which of the following lags associated with fiscal policy is expected to be alleviated by automatic...

Which of the following lags associated with fiscal policy is expected to be alleviated by automatic stabilizers such as unemployment benefits?

A) recognition lags

B) impact lags

C) recognition lags and impact lags

D) interest rate lags

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Answer #1

Answer: impact lags

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Automatic stabilizers are a type of fiscal policy designed to offset fluctuations in a nation's economic activity through their normal operation without additional, timely authorization by the government or policymakers.

Response lag, also known as impact lag, is the time it takes for corrective monetary and fiscal policies, designed to smooth out the economic cycle or respond to an adverse economic event, to affect the economy once they have been implemented.

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