Question

We would expect to see an increase in government spending lead to in planned aggregate expenditure and in real planned investment increases; decreases decreases; decreases increases; increases decreases; increases Question 20 5 pts Among the most important problems of implementing fiscal policy include all except which of the following? Assessing when policy actions should be reversed Correctly timing the desired fiscal stimulus, given the inevitable lags and forecasting errors Determining how large a stimulus to apply Determining how long a time lag to apply

Answer 1

Answer 19) Increase in government expenditure leads to increase in aggregate expenditure as it is a component of aggregate demand and this shifts IS curve rightward which increases interest rates and reduces investment.

So, option A) is correct.

Answer20) When correct Timing of fiscal stimuls is known given the forecasting errors and lags it is comparatively easy to implement the policy rather at any other problem.

So, option B) is correct.

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