The policy effectiveness lag refers to the time it takes for:
A) the government to make up its mind about what to do.
B) the government to discover the fluctuation in the economy.
C) the economy to get back to full employment.
D) the policy response to impact on economic activity.

Question

Quizplus · Accepted Answer

The policy effectiveness lag refers to the time it takes for the policy response to impact on economic activity, as policies take time to be implemented and their effects take time to be felt on the overall economy. Choices A and B are not correct as they are more related to the decision-making process rather than the lag in policy effectiveness, and choice C is not always the case as the economy may not always reach full employment even with policy interventions.

The Policy Effectiveness Lag Refers to the Time It Takes