Question

label each of the examples of fiscal policy lags.

in december 2008, the business cycle dating committee of the national bureau of economic research determined that the u.s. economy had been in recession since the fourth quarter of 2007 (when economic activity peaked).

president george w. bush released his tax relief agenda in february 2001. following the debate in congress, the economic growth and tax relief reconciliation act was signed into law in june 2001.

in september 1959, president dwight d. eisenhower signed the federal employees health benefits act, which established a voluntary health insurance plan for approximately two million employees and their dependents, with costs to be shared by the federal government and the employees. the act became effective in july 1960.

answer bank
implementation lag recognition lag legislative lag

Explanation:

1. For the first example: The Business Cycle Dating Committee took time to determine the recession (recognizing the economic condition), so this is a recognition lag.
2. For the second example: There was a debate in Congress and then the law was signed, showing the time taken for legislation, so this is a legislative lag.
3. For the third example: The Act was signed in 1959 but became effective in 1960, showing the time between signing and implementation, so this is an implementation lag.

Answer:

1. recognition lag
2. legislative lag
3. implementation lag