Chapter 12: Problem 1

Which one of these would be the most accurate statement? (L?6) a) There was a very short fiscal policy decision lag in \(2008 .\) b) There was virtually no fiscal policy impact lag in 2008 . c) In 2008 rebate checks were sent out within weeks after the beginning of the economic slowdown. d) President George W. Bush and the leaders of Congress were very slow to act after recognizing that there was an economic slowdown in early 2008 .

Short Answer

Expert verified

In 2008, rebate checks were sent out within weeks after the beginning of the economic slowdown. Thus, the correct answer is option c.

Step by step solution

Understand Fiscal Policy Terminology

Before choosing the correct option, let's define the key terms: 1. Fiscal Policy Decision Lag: The time elapsed between the identification of an economic issue and the government's decision to take action. 2. Fiscal Policy Impact Lag: The time it takes for fiscal policy measures to affect the economy after they have been implemented. Now let's evaluate each option according to these definitions and 2008's historical context.

Evaluate Option A

a) There was a very short fiscal policy decision lag in 2008. This statement implies that the government quickly responded to the economic slowdown in 2008. Let's check the other options before validating this statement.

Evaluate Option B

b) There was virtually no fiscal policy impact lag in 2008. This statement implies that the effects of the implemented fiscal policies were almost immediate. We will check the other options before validating this statement.

Evaluate Option C

c) In 2008 rebate checks were sent out within weeks after the beginning of the economic slowdown. This statement is historically accurate. Amid the economic recession in early 2008, the Economic Stimulus Act of 2008 was enacted in February, which included provisions for tax rebate checks to be sent to millions of Americans. These checks were distributed promptly within weeks after the beginning of the economic slowdown.

Evaluate Option D

d) President George W. Bush and the leaders of Congress were very slow to act after recognizing that there was an economic slowdown in early 2008. This statement conflicts with option C, which correctly states that rebate checks were sent out promptly after the beginning of the economic slowdown. Thus, this statement is inaccurate.

Select the Correct Option

Comparing all the options, option C accurately describes the fiscal policy actions in 2008. The government promptly acted in response to the economic slowdown by enacting the Economic Stimulus Act of 2008 and sending out tax rebate checks within weeks of the economic slowdown's onset. Correct answer: c) In 2008 rebate checks were sent out within weeks after the beginning of the economic slowdown.