The Fact That It Takes Time for Government to Take

question 53

Multiple Choice

The fact that it takes time for government to take action, even after a problem has been diagnosed, is one reason for the occurrence of

• A) inside lags.
• B) outside lags.
• C) crowding out.
• D) the multiplier effect.

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Definitions:

Phillips Curve

An economic concept that depicts an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Aggregate Demand

Sum of all requests for goods and services within an economic system at a certain unified price level over a specified period.

Aggregate Supply Model

An economic model that represents the total supply of goods and services that firms in an economy plan on selling during a specific time period, across all price levels.

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of inflation and the rate of unemployment in an economy.