There are four limitations to the effectiveness of discretionary fiscal policy. Which item below is NOT one of these limitations?
A) shrinking area of lawmaker discretion
B) lawmaking time lag
C) estimating potential GDP
D) fiscal multiplier
E) economic forecasting
D
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Explain the two theories of desired income distribution: the egalitarian principle and the productivity standard
What will be an ideal response?
Which of the following is a valid concern about federal budget deficits?
A. The welfare of future generations will be directly related to the per-capita size of the national debt that they inherit. B. Growth of the national debt will eventually lead to the bankruptcy of the government. C. When the debt comes due, future generations may be unable to pay it off. D. If the increases in the national debt reduce private expenditures on capital formation, aggregate demand is reduced.
In late 2007 and early 2008, the U.S. Federal Reserve pursued expansionary monetary policy. Which of the following will occur as a result of this monetary policy action?
A) The LM curve shifts down. B) The LM curve shifts up. C) The IS curve shifts rightward as the interest rate falls. D) The IS curve shifts leftward as the interest rate increases. E) none of the above
Along with currency not in banks and deposits in checking accounts, what is another component of the M1 measure of money?
A. debit cards B. traveler's checks C. credit cards D. prepaid accounts