Lags in the Approval and Implementation of Fiscal Policy

question 34

Multiple Choice

Lags in the approval and implementation of fiscal policy:

• A)weaken fiscal policy as a tool of economic stabilization.
• B)increase the effectiveness of fiscal policy as a tool of economic stabilization.
• C)help legislators better assess what policies are most appropriate to adopt.
• D)make fiscal policy more responsive to the current economic environment.
• E)cause fiscal policy to be more effective at changing the level of real GDP than changing the price level only in the long run.

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Definitions:

Pension Expense

The cost recognized in an accounting period related to the provision of pension benefits to employees.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Expected Rate Of Return

The anticipated amount of profit or loss an investment will generate over a specific period, expressed as a percentage.

Interest Cost Component

Part of pension expense calculation that represents the increase in the pension obligation due to the passage of time.