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:

Collecting Bank

A bank that handles the processing of payments (like checks) on behalf of the payee or a client bank.

Material Alteration

A substantial change to a document or agreement that affects its essence or legal effectiveness.

Genuine Signatures

Authentic and original signatures that verify the identity of signatories and their intent.

Unauthorized Signatures

Signatures made without the express permission or authority of the person purported to sign, potentially leading to legal complications in contract enforcement.