When trying to stabilize the economy, it is always good to use a variety of fiscal and monetary policy measures since
A)the size of both the fiscal and monetary policy multipliers is uncertain
B)neither fiscal nor monetary policy works well when used by itself
C)one has only a short-run effect and the other only a long-run effect
D)this way full-employment can always be maintained
E)none of the above

Question

Quizplus · Accepted Answer

The effectiveness of fiscal and monetary policy measures can vary due to the uncertainty surrounding the size of their multipliers. This means the impact of a specific amount of fiscal or monetary stimulus on the economy is not precisely predictable, making a combination of both policies a more reliable approach to stabilizing the economy.

When Trying to Stabilize the Economy, It Is Always Good