The Policy Effectiveness Lag Refers to the Time It Takes

question 7

Multiple Choice

The policy effectiveness lag refers to the time it takes for:

• A) the government to make up its mind about what to do.
• B) the government to discover the fluctuation in the economy.
• C) the economy to get back to full employment.
• D) the policy response to impact on economic activity.

---

Definitions:

Market Price

the current price at which a good or service can be bought or sold, determined by supply and demand forces in the market.

Average Total Cost

The sum of fixed and variable production costs divided by the total amount of produced goods.

Long-run

A time period in which all factors of production, including capital, are variable, allowing full industry adjustment.

Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based on factors other than the cost of production.