Monetary policy usually involves a streamlined inside lag primarily because the Federal Open Market Committee (FOMC) can act almost immediately. Unlike fiscal policy, which often requires lengthy legislative processes involving Congress and the President, monetary policy actions, such as adjusting interest rates or open market operations, can be implemented relatively quickly by the Federal Reserve. This allows for a faster response to changing economic conditions.
Why does monetary policy usually involve a streamlined inside lag?
Congress and the President act quickly on monetary policy.
Monetary policy is determined by independent leaders of industry.
The Federal Open Market Committee can act almost immediately.
Predicting economic trends is simple and reliable today.
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