Fiscal policy - Criticisms and complications

Complete the following table by indicating whether each scenario is an example of a recognition lag, implementation lag, or impact lag.

Scenario

Recognition Lag

Implementation Lag

Impact Lag

The economy enters a deep recession, and Congress takes two months to approve an extensive tax-cut bill.

Policymakers obtain relevant economic data months after a recession has already begun.

In response to a recession, Congress passes a spending bill for interstate highway upgrades that will take years to plan and complete.

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