Once Congress passes a fiscal stimulus package lags can be e

Once Congress passes a fiscal stimulus package, lags can be expected before policy instruments begin to work. These lags tend to be shorter for fiscal policy than for monetary policy.

True

False

Solution

It is true that once Congress passes a fiscal stimulus package, lags can be expected before policy instruments begin to work.

However, in cumulative manner, lags with respect to monetary policy have shorter time dimension relative to fiscal policy.

So, it can be stated that these lags tend to be shorter for monetary policy than for fiscal policy.

Hence, the given statement is False.