Which of the Following Illustrates the Effectiveness Lag

question 3

Multiple Choice

Which of the following illustrates the effectiveness lag?

• A) Policymakers believe an economic downturn has occurred,but they decide not to take action until they are sure.
• B) Policymakers are in the process of proposing policy measures to deal with the current economic slowdown.
• C) Policymakers first learn of the recession when it is five months old.
• D) Policymakers implement policy X,but it will be a few months before it starts working.
• E) Policymakers agree to policy X,but it will be at least two months before the policy is implemented.

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Definitions:

Long-Term Debt

Debt obligations that are due to be paid back over a period longer than one year, used for significant investments and capital improvements.

Accounts Payable Period

The average amount of time it takes for a business to pay off its suppliers and creditors.

Cost Of Goods Sold

The direct financial outlays for creating goods sold by a company, covering materials and labor.

Cash Cycle

The time it takes for a company to convert its investments in inventory back into cash, encompassing the entire sales and payments process.