The response lag of stabilization policy represents ?
Correct answer: D. the time that it takes for the economy to adjust to the new conditions after a new policy has been implemented
- A. the time that it takes for policy makers to recognize the existence of boom of bust
- B. the time needed for parliament to agree to a tax cut.
- C. the time that is necessary to put the desired policy into effect
- D. the time that it takes for the economy to adjust to the new conditions after a new policy has been implemented
Explanation
The response lag is the time between implementing a stabilisation policy and the economy’s reaction to it. Recognition and decision-making delays occur before implementation and are different types of policy lag.
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