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congress debates a tax cut for three months. by the time it goes into effect, the recession is ending, and inflation results. what does this example illustrate?

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Tundexi

The scenario illustrated, by the Congress on Tax cut is an example of policy lag.

What is Policy lag?

Policy lag means the lag between the time an economic problem occurs (i.e. recession,inflation) and the effect of a policy intended to counteract it.

Here, the tax cut is expected to bring the economy out of recession, whereas, an inflation is occurring as a result of the policy lag.

Therefore, the scenario illustrated, by the Congress on Tax cut is an example of policy lag.

Read more about policy lag

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