9. Lags in fiscal policy Aa Aa Which of the following scenarios is an example of
ID: 1105936 • Letter: 9
Question
9. Lags in fiscal policy Aa Aa Which of the following scenarios is an example of an impact lag? The economy enters a deep recession, and Parliament takes two months to approve an extensive tax-cut bill. growth. take years to plan and build. O The economy enters a deep recession on the same day that new quarterly data show positive economic O The economy enters a deep recession, and Parliament passes spending bills for public works projects that will spending bills for public works proftcts that will Which of the following scenarios is an example of a recognition lag? se to a recession, Parliament passes a spending bill for Trans-Canada Highway upgrades that will take years to plan and complete. O Policymakers obtain relevant economic data months after a recession has already begun. O A new law requires that all new spending bills go through at least one month of debate before receiving a Parliamentary vote.Explanation / Answer
1.Ans: The economy enters a deep recession and parliament takes two months to approvw an extensive tax cut bill.
2. Ans: Policymakers obtain relevant economic data months after a recession has already begun.( This is because it may take several months for data that is studied in order to predict economic shock. )
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