Which of the Following Is an Example of a Fiscal

question 99

Multiple Choice

Which of the following is an example of a fiscal policy that has no inside lag?

• A) a decrease in income tax rates
• B) an ongoing unemployment insurance program
• C) an increase in government spending for job training
• D) a reduction in the age at which people become eligible for retirement benefits

---

Definitions:

Duration

Duration is a measure of the sensitivity of the price of a financial asset to a change in interest rates, often used in the context of bonds to describe how price is affected by changes in rates.

Annual Coupon

The yearly interest payment paid to bondholders, typically expressed as a fixed percentage of the bond's face value.

Maturity

The date on which the principal amount of a financial instrument, such as a bond or loan, becomes due and is repaid to the investor.

Nominal Rate

The interest rate before adjustments for inflation, which reflects the percentage change in money supply but not the purchasing power.