Lags in the policy-making process come from:
A. the time it takes for policy to have an impact on the economy.
B. the process of deciding on and passing legislation.
C. lack of understanding the current state of the economy.
D. All of these are true.
Answer: D
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If Rob deposits $300 in currency into his savings account at Bank of America,
A) M1 decreases. B) M1 does not change. C) M2 increases. D) M2 decreases. E) M1 and M2 both increase.
In a coin toss bet, where both heads and tails are equally likely, you win a $2 on heads but lose $1 on tails. The expected value of the bet is
a. $0.50 b. -$0.50 c. $1.00 d. $0.00
If the Fed sells bonds, the short run impact of this policy will tend to include: a. an increase in the inflation rate. b. a reduction in unemployment
c. an increase in real output. d. an increase in real interest rates.
After a negative demand shock, what are the expected long-run adjustments?
a. Wages rise, price level rises, and output falls back to potential b. Wages fall, price level rises, and output falls back to potential c. Wages fall, price level falls, and output increases back to potential d. Wages fall, price level rises, and output increases back to potential e. Wages rise, price level falls, and output increases back to potential