8.Under which of the following circumstances would stabilization policy be ineffective but not counterproductive?a)There is a negative output gap of $60 billion, the expenditure multiplier is 3, and government increases its purchases by $20 billionb)There is a positive output gap of $10 billion, the expenditure multiplier is 2, and government reduces its purchases by $20 billionc)The implementation lag for stabilization policy is of such length that the economy corrects itself before the policy has an impactd)Expansionary fiscal policy crowds out investment on a dollar-for-dollar basise)The inflation resulting from an adverse supply shock is misinterpreted as being the result of a demand shock
9.Which of the following is not a policy lag associated with stabilization policy?
10. Which of the following is true of policy lags?
11. Which of the following creates the least risk that stabilization policy will be either ineffective or counterproductive?
12. Compared to monetary policy, fiscal policya)has a shorter decision lagb)is used for more purposes and seeks to achieve more goals