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