Answer : No. Students cannot continue answering while the Activity is paused.
NOTE: Asynchronous activities do not have a PAUSE button. Teachers cannot pause an Asynchronous activity.
Several professors have asked if students are allowed to continue answering the Activity the moment it gets paused.
The Pause button is used when the instructor deems it necessary to halt the activity and accommodate issues that might affect one or several students, e.g. a student cannot access an IRAT that has started; a fire drill is being conducted.
In this case, each student within that section is given fair treatment by not allowing others to proceed with the activity while some get left out or have the timer expire on them because of an issue they are experiencing.
When the Timer is paused, students are notified by getting this sort of screen:
The screenshot above shows what the student sees from a paused IRAT, but it is pretty much the same as all the other activities.