The lag that arises because the random nature of economic data may make it difficult for policy makers to fully understand the state of the economy is referred to as the_____ lag.

Question

Quizplus · Accepted Answer

Lag is a delay in time. In this context, recognition lag refers to the delay in recognizing that the economy is in a particular state or condition. Policy makers may not immediately recognize a recession, for example, until they see several quarters of negative growth. This recognition lag may make it difficult for policy makers to take appropriate actions in a timely manner.

The Lag That Arises Because the Random Nature of Economic