The Transmission Lag Is the Time Between

question 59

Multiple Choice

The transmission lag is the time between

• A) the implementation of a policy and when the impact of the policy is felt.
• B) the enactment of a policy (getting a policy passed by Congress with the president's approval)and the implementation of the policy (putting a policy into effect).
• C) realizing a policy is needed and enacting the policy.
• D) the occurrence of an event and policymakers realizing the event has occurred.

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Definitions:

Marginal Propensity

The ratio of change in an economic variable (such as consumption or saving) in response to a change in another (such as income), indicating the responsiveness of the variable.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used to measure inflation.

Aggregate Expenditure Line

A graphical representation that shows the total planned expenditure at various levels of national income.

Simple Spending Multiplier

The ratio of a change in output to a change in autonomous spending that initiated the change, representing how spending circulates through an economy.