Asked by
Christins Skillset
on Dec 16, 2024Verified
Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except:
A) the difficulty of estimating the natural rate of unemployment.
B) the time lags involved in implementing fiscal policy.
C) the existence of possible feedback effects of fiscal policy on aggregate supply.
D) the distinction between current and permanent income.
E) the possible feedback effects of fiscal policy on aggregate demand.
Discretionary Fiscal Policy
Involves the use of government spending and tax policies to influence the economy, based on current economic conditions and objectives.
Natural Rate
The natural rate is a concept in economics describing conditions where the economy is at equilibrium, with full employment and no inflationary or deflationary pressures.
Aggregate Supply
The aggregate amount of products and services that companies in an economy are prepared and able to offer at a specific general price level during a certain time frame.
- Examine the difficulties and critiques associated with using fiscal policy for economic stabilization.
Verified Answer
DD
Learning Objectives
- Examine the difficulties and critiques associated with using fiscal policy for economic stabilization.