Question : 21) Refer to Figure 15.1. If the condition of the : 1381505

 

21) Refer to Figure 15.1. If the condition of the economy at Point H is realized by policy makers when the economy is at Point I, policy is likely to be inappropriate due to

A) crowding out.

B) the implementation lag.

C) the recognition lag.

D) the response lag.

 

22) In general, fiscal policy has a ________ implementation lag than monetary policy and a ________ response lag.

A) shorter; shorter

B) longer; longer

C) longer; shorter

D) shorter; longer

 

23) In general, monetary policy has a ________ response lag than fiscal policy and a ________ implementation lag.

A) shorter; shorter

B) longer; longer

C) longer; shorter

D) shorter; longer

24) ________ policy and ________ policy have similar recognition time lags.

A) Contractionary; expansionary

B) Growth; recession

C) Fiscal; monetary

D) Implementation; response

 

Refer to the information provided in Figure 15.2 below to answer the questions that follow.

 

 

Figure 15.2

 

25) Refer to Figure 15.2. If the economy is currently on AD2 and policy makers implement a policy which decreases the aggregate demand curve to AD1, the time the economy needs to make the adjustment is known as the

A) implementation lag.

B) recognition lag.

C) response lag.

D) frictional lag.

26) Refer to Figure 15.2. If economic policy causes output to decrease to Y0 and the price level to decrease to P0, the aggregate demand curve shifts from

A) AD1 to AD2.

B) AD2 to AD1.

C) AD1 to beyond AD2.

D) AD2 to below AD1.

 

27) Refer to Figure 15.2. The price will fall if the economy is currently at Point ________ and policy makers implement a policy which decreases the aggregate demand curve to ________.

A) A; AD2

B) A; AD1

C) B; AD1

D) B; AD2

 

28) Which of the following is not a type of time lag regarding monetary and fiscal policy?

A) reorganization lag

B) response lag

C) recognition lag

D) implementation lag

 

29) The ________ lag for fiscal policy requires changes in congressional-approved spending and tax programs.

A) reorganization

B) response

C) implementation

D) recognition

30) The implementation lag for monetary policy requires

A) congressional changes in spending and taxes.

B) rather immediate changes in open market operations.

C) changes in state funding rebates.

D) changes in exports and imports.

 

 

31) The implementation lag for fiscal policy tends to be much longer than for monetary policy because

A) monetary changes only require the Fed to act.

B) fiscal policy changes requires both houses of Congress and the President to act.

C) fiscal policy usually requires committee hearings in both houses of Congress.

D) all of the above

 

32) During periods of ________ growth and inflationary pressures, the Federal Reserve will likely decrease the money supply to ________ interest rates.

A) slow; increase

B) slow; decrease

C) high; increase

D) high; decrease

 

33) During periods of ________ growth, the Federal Reserve will likely increase the money supply to ________ interest rates.

A) slow; increase

B) slow; decrease

C) high; increase

D) high; decrease

 

 

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