Question

“If the data and recognition lags could be reduced, activist policy probably would be more beneficial to the economy.” Is this statement true, false, or uncertain? Explain your answer.

Short answer

The assertion is valid because a shift in the aggregate demand curve will arise from a shorter data lag and recognition lag.

Step-by-step solution

Step 1. Introduction

Aggregate demand is the economy's total overall demand for final goods and services at any one time.

Step 2. Explanation

The statement is correct because the shorter data lag and recognition lag will result in a shift in the aggregate demand curve, allowing aggressive policies to quickly bring the economy to full employment. The time required to collect data and decide on the economy's future course of action will be reduced when the time span of lags decreases.