One advantage of using expansionary fiscal policy rather than relying on automatic adjustment to recover from a recessionary gap is that
A)the economy will overshoot potential GDP and a boom will be underway.
B)inflation will not be as stimulated.
C)price level will rise higher than otherwise.
D)the recovery is likely to be more rapid.
E)the recovery will be slower,thereby causing less disruption.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves deliberate government spending and tax measures to boost demand and aggregate spending in the economy. This can lead to a more rapid recovery from a recessionary gap, as the government's actions inject new money into the economy and encourage businesses and consumers to spend more. On the other hand, automatic adjustments rely on market forces to correct the gap, which can be slower and more disruptive. While expansionary fiscal policy can lead to some inflation, it can be managed through other policies such as monetary policy.

One Advantage of Using Expansionary Fiscal Policy Rather Than Relying