Which of the following lags reduces the effectiveness of active policy?
A) preliminary lag
B) accounting lag
C) self-correction lag
D) recognition lag
E) execution lag

Question

Quizplus · Accepted Answer

The recognition lag is the time it takes policymakers to recognize that an economic problem is occurring. It can take time to gather and analyze data. This lag reduces the effectiveness of active policy because by the time policymakers recognize the problem, it may have become more severe, and the policy response may be too late or too weak.

Which of the Following Lags Reduces the Effectiveness of Active