Fiscal policy may not be effective because it takes time for policymakers to implement a policy change, known as the ________ lag.
A. recognition
B. implementation
C. impact
D. legislative
Answer: B
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In a model with money neutrality, a 10% increase in the money supply leads to an increase of output by
A) more than 10%. B) 10%. C) less than 10%, but more than zero. D) zero.
Diversification
A) puts the law of large numbers to work for you. B) eliminates the risk of investing in the stock market. C) generally leads to lower rates of return than an average stock picker could earn from equity investments. D) indicates that you should invest in the company for which you work and in whom you trust.
Disinflation is
A. the same as hyperinflation. B. a substantial reduction in the rate of inflation. C. a negative inflation rate. D. a sudden change in the normal behavior of inflation, unrelated to the nation's output gap.
An estimate of a household's long-run average income is called:
A. permanent income. B. disposable income. C. per capita income. D. transitory income.