As Discussed in the Case in Point on the Size

question 177

Multiple Choice

As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that

• A) the multiplier effect of fiscal policy is much less than that for monetary policy.
• B) temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5.
• C) fiscal policy has little effect on the economy and that the multiplier value is effectively zero.
• D) statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy.

---

Definitions:

Regulatory Capture

A situation where regulatory agencies, created to act in the public's interest, instead advance the commercial or special concerns of the industry or sector they are supposed to regulate.

Environmental Protection

The practice of safeguarding the natural environment through conservation, regulation, and sustainable practices.

Consumer Safety

Refers to the efforts and policies that protect consumers from products, services, or practices that may cause harm.

Principal-Agent Problem

A conflict in priorities between a person or group making decisions on behalf of another person or group.