Question 1

In January 2009, the President submitted a bill to Congress that was designed to stimulate the economy and increase employment. The legislation was passed in March 2009, and the spending occurred from June 2009 to September 2010. Consequently,

Accepted Answer

The full effect of the spending would not be felt until some time after September 2010 because the multiplier effects take time to fully materialize. It may take several quarters or even years for the economy to fully absorb the impact of the increased government spending.

Question 2

Discretionary fiscal policy

Accepted Answer

Discretionary fiscal policy may not have desired effects on real GDP because of the time lags. There can be considerable lags between the time when a fiscal policy change is made and when it has its maximum effect on the economy. During these lags, the economic conditions may change, making the initial policy change less effective or ineffective altogether.

Question 3

The effect time lag is the time period that elapses

Accepted Answer

The effect time lag refers to the delay between the implementation of economic policies and the observable outcomes or results of those policies in the economy.

Question 4

In January 2009, the President submitted a bill to Congress in order to stimulate the economy and increase employment. The legislation was passed in March 2009, and the spending occurred from June 2009 to March 2011. As a result,

Accepted Answer

The effect time lag refers to the time it takes for the policy change to have a measurable impact on the economy. In this case, the spending occurred from June 2009 to March 2011, so the full effect of the fiscal policy change would not be felt until after March 2011 because of the effect time lag.

Question 5

To the extent that the political process of moving legislation through Congress is slow,

Accepted Answer

The action time lag will be long because it takes a significant amount of time for legislation to go through the necessary steps (committee hearing, voting, etc.) before any action can be taken. This delay in the implementation of policies can slow down the effectiveness of economic stabilization measures.

Question 6

The recognition time lag recognizes that it takes time

Accepted Answer

The answer of The recognition time lag recognizes that it...

Question 7

A problem with using fiscal policy to fine-tune the economy is that

Accepted Answer

Agreeing on the appropriate fiscal policy can be a time-consuming process involving political debates and negotiations among various groups with varying interests and priorities. This can delay the implementation of the policy, making it less effective in addressing immediate economic challenges.

Question 8

The amount of time it takes Congress to debate the size of a tax cut is known as the

Accepted Answer

The action time lag refers to the amount of time it takes for Congress to take action and decide on the size of a tax cut. This includes the time it takes for Congress to debate and pass legislation, as well as any implementation delays that may occur. The effect time lag is the amount of time it takes for the tax cut to have an impact on the economy, and the recognition time lag is the amount of time it takes for policymakers to recognize a problem and take action. The Ricardian-equivalence time lag is not a recognized term in economics.

Question 9

Once either expansionary or contractionary fiscal policy has been undertaken,

Accepted Answer

There is a time lag between the implementation of fiscal policy and the results it produces. While the lag time can vary, it generally takes several months to a year for the effects of fiscal policy to be fully felt in the economy. Therefore, it cannot be expected that aggregate demand will respond quickly and the problems in the economy will be corrected immediately.

Question 10

The various time lags involved with fiscal policy imply that

Accepted Answer

The answer of The various time lags involved with fiscal...

Question 11

The recognition time lag is the time that elapses between

Accepted Answer

The recognition time lag refers to the delay between when an economic problem arises and when it is officially acknowledged. This delay can be caused by a variety of factors, including a lack of data or understanding of the problem, political disagreements, or bureaucratic processes. Once the problem is recognized, policymakers can begin to develop and implement policies to address it, but this is a separate step that occurs after the recognition time lag.

Question 12

When data on the economy requires some time to gather and interpret, we have a(n)

Accepted Answer

Recognition time lag refers to the delay in recognizing that a change has occurred in the economy. It takes time to gather and analyze data before an accurate assessment of the current state of the economy can be made. The other choices (aggregate time lag, action time lag, and effect time lag) refer to other aspects of the time delay in economic policy.

Question 13

When it takes time for the president and Congress to change fiscal policy to act on economic data, we have a(n)

Accepted Answer

The time it takes for the president and Congress to change fiscal policy to act on economic data is referred to as the action time lag.

Question 14

The amount of time that elapses between the implementation of a policy and the results of that policy is

Accepted Answer

The effect time lag refers to the amount of time it takes for a policy to produce results, which can be influenced by various factors such as the complexity of the policy and the economic conditions. The recognition time lag refers to the delay in recognizing the need for a policy change, while the action time lag refers to the delay in implementing a policy once it has been recognized as necessary. Fiscal policy refers to the government's use of taxation and spending to influence the economy.

Question 15

The time required to acquire information about the state of the economy is referred to as

Accepted Answer

The answer of The time required to acquire information about...

Question 16

Fiscal policy may end up being destabilizing to an economy because

Accepted Answer

Fiscal policy has time lags that can cause the policy changes to take effect too late to solve the problem it was supposed to solve. This can end up being destabilizing to an economy because it can lead to over or undershooting of the policy goals, which can exacerbate economic fluctuations.

Question 17

The amount of time that it takes to identify a national economic problem is

Accepted Answer

The time it takes to identify a national economic problem is called the recognition time lag. The options A, C, and D refer to other aspects of the economic policy-making process.

Question 18

The amount of time that it takes between recognizing an economic problem and implementing policy to solve it is

Accepted Answer

The time between recognizing an economic problem and implementing policy to solve it is known as the action time lag. This is the delay that occurs between identifying the need for policy action and actually enacting the policy, which can depend on a variety of factors such as political processes, bureaucratic procedures, and the complexity of the problem. Fiscal policy refers to the use of government spending and taxation to influence the economy, while recognition time lag and effect time lag refer to other aspects of policy implementation.

Question 19

The action time lag is the time period that elapses

Accepted Answer

The action time lag refers to the delay between the recognition of an economic problem and the implementation of policies to solve it.

Question 20

The time that elapses between the implementation of a policy and its intended result is referred to as

Accepted Answer

The time that elapses between the implementation of a policy and its intended result is referred to as the effect time lag. This means that it takes some time for the policy to produce the desired effect, and this delay can vary depending on the specific policy and its implementation. The other options, such as the action time lag or the recognition time lag, may refer to other aspects of policy implementation but do not specifically capture the delay between implementation and effect.

Quiz 13: Fiscal Policy