Identifying time lags advocates of active policy face several obstacles when implementing discretionary fiscal or monetary policy, such as identifying the economy? s potential output level, the natural rate of unemployment, and the effects of a passive approach. policymakers must also cope with a multitude of time lags that complicate the implementation of active policy. identify the type of time lag illustrated in the following scenario: policymakers have implemented an expansionary monetary policy, but it takes several months for the change. in the federal funds rate to translate into a change in aggregate demand and output. decision-making lag implementation lag recognition lag effectiveness lag

You are the manager of the packaging department in a cookie factory. (obviously, the packaging employees cannot eat the cookies that are transferred in during the period.) after your employees insert cookies into colorful packages (step 1) for display on store shelves, the packages of cookies are then boxed using cardboard cartons (step 2) for shipment to stores. each unit of product is represented by a carton of packaged cookies. the packaging department began the period with 1,000 units of cookies. during the period, 5,000 units of cookies were transferred in from the baking department and 5,500 units of cookies were transferred out to the finished goods department. the number of units of cookies in the ending inventory of the packaging department equals: