Which of the following is not a weakness of fiscal policy?
A)Implementation of policy is difficult.
B)Time lags in fiscal policy are long and variable.
C)Fiscal policy works only during periods of stagflation.
D)Fiscal policy often affects only current income,but many economic decisions are made on the basis of permanent income.
E)Fiscal policy might have undesirable long-term effects on short-run aggregate supply.

Question

Quizplus · Accepted Answer

Fiscal policy is meant to stabilize the economy during times of recession or inflation, not just during periods of stagflation. Therefore, the statement that "Fiscal policy works only during periods of stagflation" is inaccurate and not a weakness of fiscal policy.

Which of the Following Is Not a Weakness of Fiscal