Which of the following is not a weakness of fiscal policy as a tool of economic stabilization?
A) It is ineffective in dealing with stagflation.
B) Its correct implementation depends on an accurate estimate of potential output.
C) It is subject to lags.
D) It affects only aggregate demand but does not have any impact on aggregate supply.
E) Households may not respond to changes they perceive as permanent.
Correct Answer:
Verified
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