Suppose a recession surprises economic forecasters who did not see it coming. This is an example of a(n) _____
A) cyclical lag.
B) recognition lag.
C) decision-making lag.
D) implementation lag.
E) effectiveness lag.

Question

Quizplus · Accepted Answer

A recognition lag occurs when a change in the economy has already occurred, but it takes time for economic forecasters to recognize and acknowledge it. In this scenario, the recession was not anticipated, indicating a recognition lag. Choice A refers to a timing delay in the response to the recession, while choices C, D, and E pertain to other types of lags in the policy response to economic changes.

Suppose a Recession Surprises Economic Forecasters Who Did Not See