Refer to the information provided in Figure 29.2 below to answer the question(s) that follow. Figure 29.2
-Refer to Figure 29.2. If the economy is currently at Point B and policy makers implement a policy which shifts the aggregate demand curve to AD₁, the time the economy needs to make the adjustment is known as the

Question

Refer to the information provided in Figure 29.2 below to answer the question(s) that follow.

Figure 29.2
-Refer to Figure 29.2. If the economy is currently at Point B and policy makers implement a policy which shifts the aggregate demand curve to AD₁, the time the economy needs to make the adjustment is known as the

Quizplus · Accepted Answer

The time the economy needs to make the adjustment is known as the response lag. This lag refers to the period it takes for changes in the aggregate demand to have an effect on output and prices in the economy.

Refer to the Information Provided in Figure 29