The Implementation Lag for Fiscal Policy Tends to Be Much

question 257

Multiple Choice

The implementation lag for fiscal policy tends to be much longer than for monetary policy because fiscal policy requires

• A) changes in required reserves.
• B) changes in open-market operations.
• C) changes in congressional-approved spending and tax programs.
• D) changes in exports and imports.

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Definitions:

Initial Outlay

The initial investment amount required to start a project or purchase an asset.

Future Cash Inflows

Expected incoming funds or earnings generated from investments, operations, or financial activities in the future.

Discount Rate

The discount rate that's used to estimate the present value of future cash flows within discounted cash flow analysis.

Net Present Value

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment, calculated by summing the present values of incoming and outgoing cash flows over a period of time.