The inside lag is the:
a. time between a shock to the economy and the policy action responding to that shock.
b. time between a policy action and its influence on the economy.
c. time between a shock to the economy and the influence on the economy of a policy action.
d. difference between the time it takes to implement monetary policy and the time it takes to implement fiscal policy.
Answer: a. time between a shock to the economy and the policy action responding to that shock.
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For each outcome below, tell what type of shift must have taken place in either the aggregate demand curve or the long-run aggregate supply curve
(a) In the short run, the price level is unchanged and output rises. (b) In the long run, the price level declines and output is unchanged. (c) In the long run, the price level rises and output declines.
You are unable to sleep because your hotel room is right underneath the noisy air conditioning system. We would classify this situation as an
A. external cost. B. internal cost. C. external benefit. D. internal benefit.