The Effect Time Lag of Fiscal Policy Refers to

question 46

Multiple Choice

The effect time lag of fiscal policy refers to

• A)the time needed for Parliament to enact a policy.
• B)the delay in recognizing an economic problem.
• C)the time that elapses between the onset of a policy and the results of that policy on the economy.
• D)the difficulty in getting the Prime Minister and Parliament to agree on an appropriate policy.

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Definitions:

Shut Down

A short-term decision by a firm to cease operations because current operation is not covering variable costs.

Firm

An organization that produces goods or provides services, usually with the aim of making a profit.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Minimum Return

The lowest expected or required return on an investment over a specified period.