The Time Period Between When Economic Conditions Change and When

question 108

Multiple Choice

The time period between when economic conditions change and when policy makers are aware of the change is called the

• A) index of leading indicators.
• B) administrative lag.
• C) recognition lag.
• D) impact lag.

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Definitions:

Real Rate of Interest

The rate of interest an investor expects to receive after allowing for inflation, distinguishing from the nominal rate of interest, which does not account for inflation.

Deflation

A decrease in the general price level of goods and services in an economy over a period.

CPI

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Base Year

A specific year against which economic growth, prices, or other economic indicators are measured and compared.