Describe the lags in the policymaking process and how they might lead to instability.
What will be an ideal response?
Data lag: The lack of immediate data availability causes this lag.Recognition lag: The difficulty policymakers have in determining the state of the economy causes this lag.Decision lag: The time needed to make a decision causes this lag.Implementation lag: The speed with which a change in policy is implemented can cause an implementation lag.Effectiveness lag: The time it take from when a policy is enacted to when it has an effect on the economy can also have a lag.?If these lags are long enough, policymakers may be putting the wrong policy in place at the wrong time, making the business cycle worse instead of better.
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