Economics Ch. 9

The mistiming problem with discretionary fiscal policy results from

- a delay in recognizing a recession - a delay in agreeing on a solution to a recession - a delay in getting a particular plan implemented with the money getting into people's hands

Which of the following would qualify as an aggregate supply shock?

an unexpected increase in oil prices

Nondiscretionary Fiscal Policy works by having

both progressive income tax rates take a portion of increased income and welfare programs reduce spending on people when they have increased incomes thereby dampening periods of economic growth.

The arguments that the Obama administration used to justify the stimulus plan are

consistent with the theory expressed in the chapter's discussion of discretionary fiscal policy

The late 1960's era Johnson 10% tax surcharge designed to curb inflation is an example of

discretionary (and contractionary) fiscal policy

The portion of the Obama stimulus package that increased spending is best thought of as

discretionary (and expansionary) fiscal policy

Replacement of a progressive income tax system with a single income tax rate would be an example of

discretionary fiscal policy

Real economic growth during the first two years of President George W. Bush's second term was

lower than real economic growth during the first two years of president clinton's second term

If you were to use an Aggregate Supply - Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a negative aggregate demand shock, you would see the aggregate demand curve move

to the left, back towards its pre shock position as a result of these policies

A recent example of the recognition lag came in the form of it taking

until fall 2001 to recognize that the recession of 2001 had started in january 2001

The portion of the Obama stimulus package that bolstered state unemployment plans is best thought of as

No discretionary fiscal policy

Which of the following would he described as the administrative lag

The time required to agree upon a policy remedy for recession

An example of discretionary fiscal policy would be

a federal jobs program adopted to stimulate consumption.

An example of discretionary fiscal policy would be

a tax increase adopted to control inflationary pressures

Short-run contractionary Fiscal Policy would result in

aggregate demand moving to the left

Short-run expansionary Fiscal Policy would result in

aggregate demand moving to the right

Using the aggregate supply - aggregate demand model, the tax cuts of 2001 and 2003 that came in the form of tax rebate checks would cause

aggregate demand to shift to the right

The purpose of fiscal policy is to

alter the direction of the economy

Real economic growth during the first two years of President George W. Bush's second term was

approximately 3.2% per year

The operational lag seemingly did not apply in the case of the 2003 tax cut because it took

only a month or two from the passage of the 2003 tax cut to the issuance to rebate checks

A political problem with discretionary fiscal policy is the

political business cycle ability of powerful politicians to direct government spending to their favored causes

In terms of timing, the 2003 rebate was

proposed at a time the economy needed a boost

A recent example of the administrative lag came in the form of it taking

several months in 2003 for congress to agree on a specific tax cut package even after they had agreed on having one

An example of nondiscretionary fiscal policy would be

the operation of the welfare state

The Obama stimulus plan's requirement that projects be "shovel-ready" was designed to combat which of these?

the operational lag

Which of the following would be described as the operational lag?

the time required to get a particular plan implemented with the money getting into peoples' hands

Which of the following would be described as the recognition lag?

the time required to know that there is a recession