Which of the Following Statements Is True About Fiscal Policy

question 35

Multiple Choice

Which of the following statements is true about fiscal policy lags?

• A) Automatic stabilizers have a much shorter impact lag than discretionary fiscal policy.
• B) Although the recognition lag is equally long for discretionary fiscal policy and for automatic stabilizers, the latter avoid implementation lag because automatic stabilizers are triggered automatically.
• C) Unlike discretionary fiscal policy, automatic stabilizers respond automatically to changes in the economy, thus avoiding the recognition and implementation lags.
• D) Although automatic stabilizers have a much shorter lag, discretionary fiscal policy instruments have a more potent impact on the economy because they are more precise.

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Definitions:

Payroll Office

The department within an organization that is responsible for processing employee paychecks, withholding taxes, and maintaining financial records related to employment.

Human Resources

The department within an organization responsible for managing employee-related processes, including recruitment, training, and payroll.

Accounting and Finance

The area concerned with the management of funds and monetary transactions within an organization.

Outsourcing

The practice of hiring external firms or individuals to perform tasks, handle operations or provide services for an organization.