Fiscal Policy Is Difficult to Implement Quickly Because

question 17

Multiple Choice

Fiscal policy is difficult to implement quickly because

• A) it requires political negotiations.
• B) much of government spending is nondiscretionary and cannot be changed.
• C) increases in tax rates affect consumer spending gradually.
• D) it requires political negotiations, and much of government spending is nondiscretionary and cannot be changed.
• E) it requires political negotiations, and increases in tax rates affect consumer spending gradually.

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Definitions:

Direct Financing Lease

A leasing arrangement where the lessor purchases an asset and leases it out, recognizing interest income over the lease term.

Implicit Rate

The interest rate implied in a lease arrangement, calculated based on the present value of lease payments and the asset's fair value.

Incremental Borrowing Rate

The interest rate a borrower would have to pay to take on additional debt, used as a benchmark in lease accounting to measure lease liabilities in the absence of a specified rate in the lease.

Major Overhaul

Extensive repairs and maintenance on an asset that significantly extend its useful life or enhance its performance.