Some economists and policymakers criticized the Fed (the central bank in the United States)for taking too much time understanding and identifying the problems in financial markets which led to the financial crisis of 2007-2009.This criticism best describes the ________ as a limitation of monetary policy.
A) implementation lag
B) recognition lag
C) impact lag
D) asymmetry lag

Question

Quizplus · Accepted Answer

The criticism of the Fed for taking too much time understanding and identifying the problems in financial markets which led to the financial crisis of 2007-2009 is an example of the recognition lag as a limitation of monetary policy. The recognition lag refers to the delay in recognizing that a problem exists before implementing policies to address it.

Some Economists and Policymakers Criticized the Fed (The Central Bank