Question

Suppose economic conditions call for a tax increase but Congress does not implement this measure because an election is approaching. This is an example of which of the real-world problems associated with fiscal policy?

Answer 1

Answer:

Implementation lag

Explanation:

there are four types of lags associated with fiscal policy

Administrative lag is the time it takes to enact the needed policies. Operational lag is the time it takes for the policy to be enacted to the time the effects are felt in the economy

Recognition lag is the amount of time it takes for authorities to recognise a problem in the economy that needs fiscal policy intervention.

Implementation lag is the amount of time it takes for fiscal policy decisions to be implemented.