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
A)implementation lag.
B)recognition lag.
C)response lag.
D)frictional lag.

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
A)implementation lag. 
B)recognition lag. 
C)response lag. 
D)frictional lag.

Quizplus · Accepted Answer

The time the economy needs to make the adjustment after policy is implemented is known as the response lag. This is the time it takes for the effects of the policy change to show up in the economy. The recognition lag refers to the time it takes policy makers to recognize that a change in policy is needed, while the implementation lag refers to the time it takes for policy to be put into action. The frictional lag refers to the time it takes for labor and resources to shift from one sector of the economy to another.

Refer to the Information Provided in Figure 15