The recognition lag refers to the:
a. time taken for changes in the money supply to be translated into changes in realGDP
b. time taken by policymakers to formulate an appropriate policy to solve aneconomic problem.
c. time taken by policies to have an impact on the different macroeconomic variables.
d. time taken by policymakers to recognize that an economic problem exists.
e. natural difference between monetary policy timing and fiscal policy timing.
d
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Indicate whether each of the following transactions represents the purchase of a final good
1. The purchase of tires from Bridgestone by an automobile manufacturer? 2. The purchase of two new elementary school buildings by the state government? 3. The purchase of french wine by a US consumer? 4. The purchase of a new machine tool by the Ford Motor company?
Inflation can cause a misallocation of resources because
A. firms have to change their price labels at unusual times. B. the nominal rate of inflation doesn't equal the real rate of inflation. C. people are encouraged to borrow too much. D. inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices.