For each of the following scenarios, determine which time lag is most likely to result when designing and implementing fiscal policy.
a. The separation of power demonstrated between the legislative and executive branches of government combined with strong partisanship attitude among our elected politicians.
b. The fact that it takes economists working for the National Bureau of Economic Research months to declare the dates of peaks and troughs.
c. The time it takes to design and build new infrastructure after these projects have been passed by the legislature.
Answer:
a. Legislative Lag
b. Recognition Lag
c. Implementation Lag
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If you were building a macroeconomic model that explores the effect of an increase in income tax rates on the size of the labor force, the exogenous variable(s) would be
A) income tax rates. B) the size of the labor force. C) both income tax rates and the size of the labor force. D) neither income tax rates nor the size of the labor force.
Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. The expansion path depends
a. on the price of corn-based feed only. b. on the price of soybean-based feed only. c. on neither the price of corn-based or soybean-based feed. d. on whether the price of corn-based feed is greater than or less than 2/5 the price of soybean-based feed.
Saccharin and aspartame are both low-calorie substitutes for sugar. If saccharin is found to cause cancer,
a. the price of aspartame will increase b. the price of sugar will decrease c. the price of saccharin will increase d. the demand curves for aspartame and sugar will shift leftward e. aspartame and sugar will be complements
The unemployment rate is calculated as: a. the number of officially unemployed persons divided by the number of officially employed persons
b. the number of officially employed persons divided by the number of officially unemployed persons. c. the number of officially unemployed persons divided by the number of officially employed plus unemployed persons. d. the number of officially unemployed persons divided by the population.