Question
1

When fiscal stimulus is being used to fight a recession, how long do the inside and outside lags last? a. Several decades b.
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Other things being equal, when the effective multiplier for fiscal policy is 2, government purchases would require how much c
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Week 14 Assignment 1 Economists might be uncertain about the exact value of the effective multiplier for fiscal policy, but t
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Week 14 Assignment 1 What is it called when the Fed holds interest rates constant in order to increase the effectiveness of f
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Answer #1

1 - Option C

A year or two atleast

The fiscal policy has the greater lags as compared to the monetary policy

2 - Option C

250 billion increase

Increase in govt. Purchase = 500/2

= $ 250 billion

Since the gap to be closed is negative , the increase will be needed and not decrease.

3 - Option D

It is greater than 1

For the multiplier to be effective , its value should be more than 1. The value of 1 will have no effect of multiplying.

4 - Option B

Crowding out policy

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