Question

Which of these is an example of inside lag in monetary policy?

Answer 1

The correct answer is C. The Fed lowers interest rates several months into a recession. It's a lag because they could've done it sooner and helped with the recession sooner but decided not to and thus they created a lag in monetary policy of a federation. It's like if the congress refused to help with the recession for no reason for a few months.

Answer 2

C. The Fed lowers interest rates several months into a recession.   wolf93 is correct.