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Economists estimate that the total lag for monetary policy is about: 2-4 years. 3-12 months. 1-2...

Economists estimate that the total lag for monetary policy is about:

2-4 years.

3-12 months.

1-2 days.

2 weeks to 1 month.

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Answer #1

The answer is option b- 3.12 months

Time lags occurring between the onset of an economic problem and the policy's full impact to correct the problem. Policy lags can counter productivity by attempting to fine-tune the economy and reducing the impact of business cycles. It will start to have impacts on an economy that is vulnerable to transient shocks as policy operates with a delay.
Policy lags can reduce the effectiveness of stabilization policies in the business cycle and can even destabilize the economy. Policy lags are often different for monetary policy than for fiscal policy, especially within lags.

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