Refer to the information. The recognition lag of fiscal policy is reflected in events:
Answer the question on the basis of the following sequence of events involving fiscal policy:
(1) The composite index of leading indicators turns downward for three consecutive months,
suggesting the possibility of a recession. (2) Economists reach agreement that the economy is
moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by
Congress and signed by the president. (5) Consumption spending begins to rise, aggregate
demand increases, and the economy begins to recover.
A. 1 and 2.
B. 2 and 3.
C. 3 and 4.
D. 4 and 5.
A. 1 and 2.
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We consider the preferences of the consumer because
A) we want to understand the consumer's reaction to changing circumstances. B) we want to determine the best marketing strategy. C) the government wants to make the best consumption and leisure choice. D) the firm needs to determine what to produce.
Economics is about the allocation of scarce resources. Which of the following is NOT an example of economic scarcity?
A) If Steve goes to see a movie on Saturday, he will not be able to afford buying ice cream. B) If Jenny studies for her economics quiz this evening, she will not have time to walk her dog. C) If General Motors increases its production of SUVs this year, it will have to spend more on advertising. D) If Barnes and Noble bookstore increases the number of titles it carries, it will have to reallocate shelf space to accommodate the new titles.
Carlson earns an income of $10,000 per month. Under the federal income tax system, the first $9,000 he earns is taxed at 10% and the remaining income is taxed at 20%. The tax owed by Carlson equals _____
a. $1,100 b. $2,000 c. $1,500 d. $3,000
If a good is normal, then an increase in income will result in
a. an increase in the demand for the good.
b. a decrease in the demand for the good.
c. a movement down and to the right along the demand curve for the good.
d. a movement up and to the left along the demand curve for the good.