We present a time-resolved technique to measure optical excitation processes with a time resolution shorter than the oscillation period of the exciting light. Our terahertz (THz) experiments fully resolve the polarization dynamics of electrons in semiconductor heterostructures when they are excited by a THz pulse. The time resolution of the polarization enables us to deduce the population dynamics of the excited state, which includes the dynamics of a virtual population in the case of off-resonant excitation.