15. For each of the following separate scenarios, determine the associated shortcomings of
fiscal policy.
CHOOSE ANSWER: crowding out, impact lag, saving shift, implementation lag,
recognition lag.
A. The government has increased taxes to control inflation. Yet it will take a long time for
the policy to have any effects on the economy.___________
B. The government cuts taxes now. Yet people save more as they expect the government
will raise taxes in the future.____________
C. Households save more and consume less because government borrowings drive up the
interest rate._____________________