Once a Policy Has Been Implemented, a Period of Time

question 120

Multiple Choice

Once a policy has been implemented, a period of time passes before the full impact of the policy registers on the economy.What is this time lag known as?  

• A) as a decision-making lag 
• B) as an implementation lag 
• C) as an effectiveness lag 
• D) as a recognition lag

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Definitions:

Financial Panics

Instances of widespread fear and anxiety among investors and the general public leading to rapid withdraws from banks or sell-offs in markets, often triggering economic downturns.

Open Market

A freely competitive market in which any buyer or seller can participate, and prices are determined by supply and demand.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the principal, which lenders charge borrowers for the use of their money.

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves that banks must hold against deposits.