Refer to the information provided in Figure 15.1 below to answer the questions that follow.
Figure 15.1
-Refer to Figure 15.1.If the condition of the economy at point E is realized by policy makers when the economy is at point G,policy is likely to be inappropriate due to
A)crowding out.
B)the recognition lag.
C)the implementation lag.
D)the response lag.

Question

Refer to the information provided in Figure 15.1 below to answer the questions that follow.
  Figure 15.1
-Refer to Figure 15.1.If the condition of the economy at point E is realized by policy makers when the economy is at point G,policy is likely to be inappropriate due to
A)crowding out. 
B)the recognition lag. 
C)the implementation lag. 
D)the response lag.

Quizplus · Accepted Answer

The recognition lag refers to the delay in identifying the current economic condition. If policymakers think the economy is at point E when it is actually at point G, they may implement inappropriate policies due to this lag.

Refer to the Information Provided in Figure 15