The Outside Lag Is the Time

question 10

Multiple Choice

The outside lag is the time:

• A) before automatic stabilizers respond to economic activity.
• B) when automatic stabilizers are not effective.
• C) between a shock to the economy and the policy action responding to the shock.
• D) between a policy action and its influence on the economy.

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Definitions:

Variable Costs

Costs that vary directly with the level of output or production, such as materials and labor costs.

Industry Short-run

A period in which at least one of a firm's inputs is fixed, limiting the firm's ability to adjust fully to market changes.

Marginal Cost

The financial addition incurred by manufacturing one more unit of a product or service.

Fixed Cost

represents expenses that do not change in total regardless of the level of output or activity, such as rent or salaries.