The period that elapses between the passage of legislation reducing taxes and the time the tax cut is put into effect is called the __________ lag.
A) data
B) wait-and-see
C) legislative
D) transmission

Question

Quizplus · Accepted Answer

The period between the passage of legislation and the time the tax cut takes effect is called the transmission lag. This is because there needs to be time for the government to implement the necessary changes to the tax system to reflect the new legislation. The other options are incorrect: A) data lag refers to the time it takes for economic data to be collected and analyzed; B) wait-and-see lag is not a commonly used term in economics; and C) legislative lag refers to the time it takes for legislation to be proposed, debated, and passed.

The Period That Elapses Between the Passage of Legislation Reducing