Once Either Expansionary or Contractionary Fiscal Policy Has Been Undertaken

question 14

Multiple Choice

Once either expansionary or contractionary fiscal policy has been undertaken,

• A) aggregate demand will respond quickly and the problems in the economy will be corrected.
• B) aggregate demand will respond quickly in the short run but the economy will not improve in the long-run.
• C) a time lag exists between implementation and the results of the policy.
• D) taxes will need to be adjusted because of the recognition time lag.

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Definitions:

Hypothesis Testing

The process of making decisions or inferences about a population based on sample data, often involving the use of a statistical test.

Test Statistic

A measure calculated from sample data during a hypothesis test used to determine whether to reject the null hypothesis.

T-Distribution

A probability distribution that arises when estimating the mean of a normally distributed population in situations where the sample size is small and population standard deviation is unknown.

Confidence Interval

A set of numerical values, obtained from statistical analysis of a sample, which is expected to encompass the actual value of a parameter from a larger, unspecified population.