Refer to the information provided in Figure 15.2 below to answer the questions that follow.
Figure 15.2
-Refer to Figure 15.2.If the economy is currently at Point B and policy makers implement a policy which shifts the aggregate demand curve to AD₁,the time the economy needs to make the adjustment is known as the

Question

Refer to the information provided in Figure 15.2 below to answer the questions that follow.

Figure 15.2
-Refer to Figure 15.2.If the economy is currently at Point B and policy makers implement a policy which shifts the aggregate demand curve to AD₁,the time the economy needs to make the adjustment is known as the

Quizplus · Accepted Answer

The time the economy takes to adjust to a policy change is known as the response lag. The implementation lag refers to the time it takes for policy makers to implement the policy, while the recognition lag refers to the time it takes for policy makers to identify the need for the policy change. Frictional lag is not a relevant term in this context.

Refer to the Information Provided in Figure 15