What are the various time lags that affect discretionary fiscal policy, and what are their effects?
What will be an ideal response?
The recognition lag refers to the time it takes before economic problems can be identified; the action time lag is the time required between recognizing the problem and putting policy into effect; and the effect time lag is the time that elapses between the onset of policy and the results of that policy. The result is that the effects of a change in fiscal policy may take hold only after the problem no longer exists, and may have unintended effects.
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Refer to Table 22-2. Calculate the GDP per capita for each country in the table. Which country has the highest standard of living? Why?
What will be an ideal response?
The misery index is calculated as the
a. inflation rate plus the unemployment rate. b. unemployment rate minus the inflation rate. c. actual inflation rate minus the expected inflation rate. d. natural unemployment rate times the inflation rate
Explain the concept of efficiency as it relates to taxation.
What will be an ideal response?
To answer the question, refer to the following table showing a demand schedule: 
As quantity demanded rises from 1,400 to 1,800, what is marginal revenue?
A. -$400 B. $50 C. $25 D. -$50 E. -$75