The time it takes for the Fed's purchase of government securities to ultimately change aggregate demand is called the _____.
A)recognition lag
B)implementation lag
C)effectiveness lag
D)decision-making lag
E)self-correction lag

Question

Quizplus · Accepted Answer

The effectiveness lag refers to the time it takes for the Fed's purchase of government securities to ultimately change aggregate demand. This lag is often due to the fact that it takes time for the newly printed money to circulate through the economy and for individuals and businesses to change their spending habits.

The Time It Takes for the Fed's Purchase of Government