An inside lag is
A) a lag in implementing policy.
B) the period of time it takes for policies to work.
C) a policy aimed at increasing GDP.
D) a policy aimed at reducing GDP.

Question

Quizplus · Accepted Answer

An inside lag refers to the delay or period of time it takes for policymakers to implement a policy decision after they have identified a problem. This delay can be caused by various factors, including bureaucratic procedures, political resistance, and informational uncertainties. As such, inside lags are a major challenge to timely policy-making and effective economic management. Option B is more related to the outside lags, which refer to the time it takes for economic policies to influence economic outcomes, usually through price and quantity adjustments in markets. Options C and D are not directly linked to the concept of inside and outside lags.

An Inside Lag Is