Automatic Fiscal Policy Is Not Subject to All the Same

question 50

True/False

Automatic fiscal policy is not subject to all the same time lags to which discretionary fiscal policy is subject.

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Definitions:

Expected Price Level

The anticipation or forecast of future prices across an economy, affecting consumer and business decisions.

Long-Term Contracts

Agreements that extend over a significant period of time, often involving commitments to buy or sell goods or services or to provide employment.

Recessionary Gaps

Situations where an economy's actual output is less than its potential output, often characterized by unemployment and underutilized resources.

Natural Rate

The natural rate often refers to the unemployment rate when the economy is at full capacity, balancing the number of job seekers with job vacancies without accelerating inflation.