econ 2301 Exam 2| Questions with 100% Solutions/Verified Answers

Which of the following contributes to implementation lag for discretionary fiscal policy? 1) the time it takes to secure bureaucratic approval for policy actions 2) the time it takes for economic agents to respond to policy actions 3) the difficulty of collecting economic data in a timely manner 4) the time it takes to borrow funds to finance the fiscal policy - ANSWER 1) the time it takes to secure bureaucratic approval for policy actions Refer to Figure 7-1. What could have caused a movement from point C to point A?Figure 7-1 1) an increase in the economy's general price level 2) a decrease in investment demand due to lower expected sales 3) a decrease in capital gains taxes 4) an increase in money supply that lowers interest rate - ANSWER 2) a decrease in investment demand due to lower expected sales