Recognition lags in fiscal policy stem largely from
A) the fact that it takes time before a fiscal policy, such as a change in government purchases or a change in taxes, is agreed to and put into effect.
B) the fact that it takes time for a policy action to have its full effect on aggregate demand.
C) the difficulty of collecting economic data in a timely and accurate fashion.
D) households and businesses may not respond to fiscal policy to the extent that policy makers had hoped, for example, they may not be as responsive to a tax cut .
Answer: C) the difficulty of collecting economic data in a timely and accurate fashion.
You might also like to view...
In economics, the term ________ means "additional" or "extra."
A) allocative B) equity C) marginal D) optimal
The Clinton Administration, faced with eight years of uninterrupted prosperity was chronically worried about inflation and thought of applying countercyclical fiscal policy but was nervous about doing so because
a. it was politically incorrect to raise taxes b. it was politically incorrect to cut government spending c. countercyclical policy had never worked before d. it didn't know where the economy would be in six months and was afraid that the countercyclical policy they would introduce would be an inappropriate one e. there was no administrative lag that it can use to implement the policy