Policy makers may not know that the economy is in a recession until six months after the recession starts; this is a phenomenon known as the
A)implementation lag
B)policy coordination problem
C)decision-making lag
D)recognition lag
E)effectiveness lag

Question

Quizplus · Accepted Answer

The recognition lag refers to the delay that occurs between when a recession begins and when policy makers recognize that the economy is in a recession. It can take several months for economic data to be collected, analyzed, and reported, which means that policy makers may not realize the severity of a recession until it has already begun to have significant negative effects on the economy. A six-month recognition lag is not uncommon.

Policy Makers May Not Know That the Economy Is in a Recession