A. the time that it takes for policy makers to recognize the existence of boom of bust
B. the time needed for parliament to agree to a tax cut.
C. the time that is necessary to put the desired policy into effect
D. the time that it takes for the economy to adjust to the new conditions after a new policy has been implemented
Related Mcqs:
- Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ?
A. decrease government spending Which the shifts the aggregate demand curve to the left
B. decrease taxes, which shifts the aggregate demand curve to the right
C. decrease taxes, which shifts the aggregate demand curve to the left
D. decrease government spending which shifts the aggregate demand curve to the right - Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending If the US federal Reserve (Which has a broader remit than the Bank of England Which is charged only with controlling inflation) chooses to engage in activist stabilization policy it should ?
A. Increase government spending and decrease taxes
B. decrease the money supply
C. decrease government spending and increase taxes
D. decrease interest rates - Which of the following statements about stabilization policy is not true ?
A. Many economists prefer automatic stabilizers because they affect the economy with a shorter lag than activist stabilization policy
B. None of these answers are true
C. Long lags enhance the ability of policy makers to fine tune the economy
D. When policy makers implement activist stabilization policies there is a significant risk that their policies may actually have a destabilizing effect - The implementation lag for monetary policy is generally ?
A. the same as it is for fiscal policy
B. much shorter than it is for fiscal policy
C. mush longer than it is for fiscal policy
D. unrelated to central bank action - To internalize a positive externality an appropriate public policy response would be to ?
A. ban the good creating the externality
B. tax the good
C. subsidize the good
D. have the government produce the good until the value of an additional unit is zero - To internalize a negative externality an appropriate public policy response would be to ?
A. have the government take over the production of the good causing the externality
B. ban the production of all goods creating negative externalities
C. tax the good
D. subsidize the good - If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?
A. an increase in the level of output
B. a decrease in the unemployment rate
C. an increase in the rate of inflation
D. All of these answers - According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?
A. The economy will experience an increase in inflation
B. The economy will experience a decrease in inflation
C. Inflation will be unaffected if price expectations are unchanging
D. None of these answers - In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?
A. decrease; depreciate
B. decrease; appreciate
C. increase; depreciate
D. increase; appreciate - The demand for money represents the idea that there is ?
A. a positive relationship between the interest rate and the quantity of money demanded
B. a negative relationship between the price level and the quantity of money demanded
C. a negative relationship between the level of aggregate output and the quantity of money demanded
D. a negative relationship between the interest rate and the quantity of money demanded
