(1) The composite index of leading indicators turns downward for three consecutive months; (2) Economists reach agreement that the economy is moving into a recession; (3) A tax cut is proposed in Parliament; (4) The tax cut is passed by Parliament; (5) Consumption spending begins to rise, aggregate demand increases, and the economy begins to recover.Refer to the above information.The recognition lag of fiscal policy is reflected in events:
A)1 and 2.
B)2 and 3.
C)3 and 4.
D)4 and 5.

Question

Quizplus · Accepted Answer

The recognition lag of fiscal policy is the time it takes for policymakers to recognize that there is an economic problem that requires intervention. Events 1 and 2 reflect this lag, as they involve the identification and agreement on the economic downturn.

(1) the Composite Index of Leading Indicators Turns Downward for Three