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:

Marginal Unit

The additional unit of a good or service, used in economics to analyze the cost or benefit of producing one more unit.

Quantity Discounts

Discounts offered by suppliers to buyers for purchasing large amounts of a product, incentivizing bulk purchases.

Breakpoint

In computing, a breakpoint is a deliberately inserted pause or halt in a program's execution for debugging purposes. In economics, it refers to a level at which there is a change in the rate or conditions of a process or system.

Holding Cost Percentage

Represents the cost incurred to store inventory over a period, expressed as a percentage of the inventory's total value, including expenses such as warehousing, insurance, and depreciation.