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ACTUAL INVESTMENT: Investment expenditures that the business sector actual undertakes during a given time period, including both planned investment and any unplanned inventory changes. This is a critical component of Keynesian economics and the analysis of macroeconomic equilibrium, which occurs when actual investment is equal to planned investment. The difference between planned and actual investment is unplanned investment, which is inventory changes caused by a difference between aggregate expenditures and aggregate output. Should actual and planned investment differ, then aggregate expenditures are not equal to aggregate output, and the macroeconomy is not in equilibrium.

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IMPACT LAG

The time lag that occurs between the implementation of a government policy designed to correct an economic problem and the complete impact of the policy. The impact lag is based on the multiplier process and can last up to a year or two or even longer. This "outside lag" is one of four policy lags associated with monetary and fiscal policy. The other three "inside lags" are recognition lag, decision lag, and implementation lag. All four policy lags can reduce the effectiveness of business-cycle stabilization policies and can even destabilize the economy.

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