One of the Timing Problems with Fiscal Policy Is an "Operational

question 24

Multiple Choice

One of the timing problems with fiscal policy is an "operational lag" that occurs between the:

• A)beginning of a recession and the time that it is recognized that the event is occurring.
• B)time the need for fiscal action is recognized and the time that action is actually taken.
• C)time that fiscal action is taken and the time that action has an impact on output, employment, and the price level.
• D)time that fiscal action has an impact on output, employment, and the price level and the time by which it can be determined if the policy is effective.

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Definitions:

P/E Ratio

The price-to-earnings ratio, a valuation metric calculated by dividing the current market price of a stock by its earnings per share.

Dividend Plowback Ratio

The portion of a company's earnings that is not distributed as dividends but is reinvested in the business, also known as the retention rate.

Earnings Growth

The rate at which a company's earnings increase over a certain period, indicating financial health and profit potential.

P/E

Price-to-Earnings ratio, a valuation metric that compares a company's market share price to its per-share earnings, used to assess if a stock is over or under-valued.