What is the essence of the problem with targeting with fiscal policy?
A. In order to meet interest rate targets, fiscal policy must be enacted very quickly.
B. It is difficult for the government to determine the target unemployment rate.
C. Economic data takes time to analyze, so the government may not know when the economy has reached its target.
D. The government may not have projects ready that will employ the people who are unemployed.
Ans: D. The government may not have projects ready that will employ the people who are unemployed.
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a. Exactly zero b. A positive number c. A negative number d. Either a positive or a negative number
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.