Question 1
The implementation lag of stabilization policy represents
◦ the time that is necessary to put the desired policy into effect once economists and policy makers recognize the need.
◦ the time needed for the economy to adjust to new conditions after new policies are introduced.
◦ the time needed for the Federal Reserve to meet.
◦ the time that is needed for policy makers to recognize the need to do something.
Question 2
Refer to the information provided in Figure 29.1 below to answer the question(s) that follow.
Refer to Figure 29.1. If the economy is actually at Point
C but policy makers think that it is still at Point
B, this is an example of
◦ economic policies ineffectiveness.
◦ recognition lag.
◦ implementation lag.
◦ response lag.
Paul Colin, Figure of a Woman.
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