Which of the following is a critical dilemma when implementing fiscal policy in

Question

Which of the following is a critical dilemma when implementing fiscal policy in reference to timing lags?

Question 1 options:

a)

b)

c)

d)

If an economy is in a recession, what would expansionary fiscal policy do?

Question 2 options:

a)

b)

c)

d)

A shift of the long-run aggregate supply curve to the right suggests which of the following?

Question 3 options:

a)

b)

c)

d)

The fact that it takes a very long time for Congress to debate and enact fiscal policies such as a tax cut for low-income households is an example of a(n):

Question 4 options:

a)

b)

c)

d)

If the government raises taxes, what will this do to the AD curve?

Question 5 options:

a)

b)

c)

d)

When economists warn about the crowding-out effect, they are referring to:

Question 6 options:

a)

b)

c)

d)

All of the following programs are considered mandatory spending EXCEPT:

Question 7 options:

a)

b)

c)

d)

What is the one major category that separates national debt from public debt?

Question 8 options:

a)

b)

c)

d)

Which of the following is a form of U.S. public debt?

Question 9 options:

a)

b)

c)

d)

Automatic stabilizers have _____ effects during times of economic prosperity and _____ effects during times of economic downturn.

Question 10 options:

a)

b)

c)

d)

Which of the following is an example of an automatic stabilizer?

Question 11 options:

a)

b)

c)

d)

Evidence has suggested that borrowing is _____ than taxation by politicians to finance fiscal policy spending, which has led to a(n) _____ of the federal government over the last few decades.

Question 12 options:

a)

b)

c)

d)

If a government collects $550 billion in taxes and spends $700 billion, it would have a:

Question 13 options:

a)

b)

c)

d)

The portion of the national debt that is not held by the Federal Reserve and government agencies include:

Question 14 options:

a)

b)

c)

d)

Reducing government spending, reducing transfer payments, or raising taxes describes which policy?

Question 15 options:

a)

b)

c)

d)

a)

Fiscal policy requires a short and contentious legislative process.

b)

Short-term variations in key indicators are common and present randomness in the data.

c)

The information lag takes up too much time and is too costly.

d)

The economy may already be in a recovery before fiscal policy is enacted

Explanation / Answer

1. c, The information lag takes up too much time and is too costly because the collection of this information takes time. The processing of this information takes time. The analysis of this information takes time. All of this is needed to document the existence of a problem and whether or not the problem warrants government policy action.

2. d, shift AD to the right because an increase in government spending, fall in taxes will increase aggregate demand thus shifting AD to right.

3.d, an increase in productivity because rightward shift indicates an increase in productivity

4. a, decision lag because it takes time for Congress time to make decisions.

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