The time between when income taxes are cut and when consumption spending increas

Question

The time between when income taxes are cut and when consumption spending increases is an example of:
Question 14 options:
  
A)    the outside lag of macroeconomic policy.
  
B)    the inside lag of macroeconomic policy.
  
C)    the outside lag of monetary policy.
  
D)    the inside lag of fiscal policy.

An economy with a trade surplus must also have:
Question 7 options:
  
A)    a trade deficit.
  
B)    a budget surplus.
  
C)    positive net capital outflows.
  
D)    positive net capital inflows.

Explanation / Answer

14. The time between when income taxes are cut and when consumption spending increases is an example of the outside lag of macroeconomic policy.

Because outside lag of macroeconomic policy or simply outside lag is the time taken for a noticable impact on the economy by implementing a fiscal or monetary policy.

7. An economy with a trade surplus must also have positive net capital outflows.

This is because net export + net capital inflow = 0.

Now trde surplus means there is a positive net export, so to satisfy the condition net capital inflow has to be negative or we can say positive net outflow.

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