Answer the question on the basis of the following sequence of events involving fiscal policy:
(1)The composite index of leading indicators turns downward for three consecutive months,suggesting the possibility of a recession.
(2)Economists reach agreement that the economy is moving into a recession.
(3)A tax cut is proposed in Congress.
(4)The tax cut is passed by Congress and signed by the president.
(5)Consumption spending begins to rise,aggregate demand increases,and the economy begins to recover. Refer to the information.The administrative lag of fiscal policy is reflected in events:

Question

Answer the question on the basis of the following sequence of events involving fiscal policy: 
(1)The composite index of leading indicators turns downward for three consecutive months,suggesting the possibility of a recession.
(2)Economists reach agreement that the economy is moving into a recession.
(3)A tax cut is proposed in Congress.
(4)The tax cut is passed by Congress and signed by the president.
(5)Consumption spending begins to rise,aggregate demand increases,and the economy begins to recover. Refer to the information.The administrative lag of fiscal policy is reflected in events:

Quizplus · Accepted Answer

The administrative lag refers to the time it takes for policymakers to recognize the need for action and to implement that action. In this sequence of events, the administrative lag is reflected in events 3 and 4, as it takes time for Congress to propose and pass a tax cut and for the president to sign it into law. The earlier events (1 and 2) reflect the recognition lag, which is the time it takes for policymakers to recognize a problem or issue. The latter events (4 and 5) reflect the operational lag, which is the time it takes for the policy to take effect and for the economy to respond.

Answer the Question on the Basis of the Following Sequence