The Great Moderation consensus among macroeconomists is that fiscal policy should be used sparingly because:
A) monetary policy is always more effective.
B) it always requires higher taxes.
C) lags in adjusting to fiscal policy can make it counterproductive.
D) of the risk of government waste.

Question

Quizplus · Accepted Answer

The Great Moderation consensus among macroeconomists is that fiscal policy should be used sparingly because lags in adjusting to fiscal policy can make it counterproductive. While fiscal policy can have a positive impact on the economy, it often takes time for the effects to be felt and for policy makers to adjust policies accordingly. This can result in policies being implemented at the wrong time or being inconsistent with the current economic conditions, which can worsen rather than improve economic outcomes.

The Great Moderation Consensus Among Macroeconomists Is That Fiscal Policy