Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except:
A)the difficulty of estimating the natural rate of unemployment.
B)the time lags involved in implementing fiscal policy.
C)the existence of possible feedback effects of fiscal policy on aggregate supply.
D)the distinction between current and permanent income.
E)the possible feedback effects of fiscal policy on aggregate demand.

Question

Quizplus · Accepted Answer

The possible feedback effects of fiscal policy on aggregate demand were not questioned as a reason for the ineffectiveness of discretionary fiscal policy; rather, they are a fundamental aspect of how fiscal policy is expected to work.

Economists and Policy Makers Questioned the Effectiveness of Discretionary Fiscal