The time between which an economic shock is recognized and when the government passes a plan to carry out a policy response is called a(n)

Question

Quizplus · Accepted Answer

The time between recognizing an economic shock and passing a policy response is known as the legislative lag because it refers to the time it takes for the government to pass legislation or a policy in response to the economic shock. The other choices have different meanings: 
- Recognition lag refers to the time it takes for policymakers to recognize that an economic shock has occurred. 
- Effectiveness lag refers to the time it takes for a policy to have its intended effect on the economy. 
- Adjustment lag refers to the time it takes for firms and households to adjust their behavior in response to a policy or economic shock.

The Time Between Which an Economic Shock Is Recognized and When