The New Classical Critique of Fiscal Policy Asserts That

question 50

Multiple Choice

The new classical critique of fiscal policy asserts that

• A) decreases in government spending and increases in taxes are largely offset by increases in savings.
• B) recognition lags make it difficult to time fiscal policy.
• C) implementation lags make it hard to get fiscal-policy proposals through the government.
• D) impact lags make it difficult to know how much the spending multiplier will impact the total income in an economy.
• E) increases in government spending and decreases in taxes are largely offset by increases in savings.

---

Definitions:

Positive Linear Relationship

A direct correlation between two variables where an increase in one variable results in an increase in the other.

Population Coefficient

A parameter that represents a characteristic or measure of an entire population.

Significance Level

A statistical term that measures the probability of rejecting the null hypothesis when it is actually true, often denoted by alpha (α).

Higher Sales

An increase in the quantity of goods or services sold, often regarded as a key indicator of business performance and growth.