What are law-making lags? What effect do they have on the use of discretionary fiscal policy?
What will be an ideal response?
Law-making lags refer to the fact that before discretionary policy can be implemented, Congress must pass an act. There can be significant time involved for Congress to debate and reach consensus on a specific piece of legislation. The time it takes is called the "law-making lag." Law-making lags make discretionary fiscal policy more difficult because by the time the policy is actually implemented, the state of the economy might have changed and so the newly enacted discretionary fiscal policy might now be the wrong policy.
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Potential GDP is the
A) the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. B) current value of production in the economy. C) value of production when the economy is in a recession. D) value of production when the economy is at a peak.
The Federal Reserve Board of Governors has:
a. seven members who serve 6-year terms. b. 12 members who serve 14-year terms. c. seven members who serve 4-year terms. d. 12 members who serve 4-year terms. e. seven members who serve 14-year terms.