Using fiscal policy to stabilize the economy is difficult because:
A)potential income is known.
B)the effects of policy changes are known with certainty.
C)there are time lags involved in the use of fiscal policy.
D)the size of the government debt doesn't matter.

Question

Quizplus · Accepted Answer

Fiscal policy involves government spending and taxation decisions, which are subject to time lags in their implementation and effects. These lags make it challenging to stabilize the economy promptly and effectively.

Using Fiscal Policy to Stabilize the Economy Is Difficult Because