Economists and Policy Makers Questioned the Effectiveness of Discretionary Fiscal

question 43

Multiple Choice

Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except

• A)the difficulty of estimating the natural rate of unemployment
• B)the time lags involved in implementing fiscal policy
• C)the existence of possible feedback effects of fiscal policy on aggregate supply
• D)the distinction between current and permanent income
• E)the problems of inflation and unemployment were basically solved

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Definitions:

Local Property Taxes

Taxes imposed by local governments based on the assessed value of property, primarily real estate, used to fund local services such as schools, roads, and police.

Industrial Countries

Nations with developed economies characterized by significant industrial activity and high income per capita.

Public Goods

Goods that are non-excludable and non-rivalrous in consumption, meaning they are available for everyone to consume, without diminishing the availability for others.

Social Security Taxes

Taxes levied on both employers and employees to fund the Social Security program, which provides benefits to retirees, disabled individuals, and survivors of deceased workers.