The time between which an economic shock is recognized and when the government passes a plan to carry out a policy response is called the:
A) recognition lag.
B) legislative lag.
C) effectiveness lag.
D) adjustment lag.

Question

Quizplus · Accepted Answer

The time period between recognizing an economic shock and passing a plan to carry out a policy response is known as the legislative lag because it involves the time taken by the government to formulate and enact a plan to address the economic issue. The recognition lag refers to the time taken to identify an economic problem, while the effectiveness lag occurs after the policy has been enacted, during which its effects are felt. The adjustment lag refers to the time taken for markets and the economy to respond to policy changes.

The Time Between Which an Economic Shock Is Recognized and When