Discretionary Fiscal Policy Is Handicapped by

question 14

Multiple Choice

Discretionary fiscal policy is handicapped by

• A)lawmaking time lags,induced taxes,and automatic stabilizers.
• B)lawmaking time lags,estimation of potential GDP,and economic forecasting.
• C)economic forecasting,lawmaking time lags,and induced taxes.
• D)automatic stabilizers,lawmaking time lags,and potential GDP estimation.
• E)automatic stabilizers,the multipliers,and potential GDP estimation.

Understand the concepts of rational expectations and their impact on policy effectiveness.

Grasp the fundamentals of supply-side economics, including the role of tax rates.

Understand the impact of changes in the money supply on inflation and economic stability.

Understand the principles of adaptive and rational expectations theory.

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Definitions:

Future Sacrifice

An expected loss of economic benefits due to commitments or obligations a business has entered into.

Liability

A financial obligation or debt owed by a business to another entity, typically due for repayment in the future.

Company

A legal entity formed by individuals, stockholders, or shareholders, with the purpose of operating for profit.

Economic Resource

An asset or input used in the production of goods and services with the capability to provide future economic benefit.