What are the four major limits to fiscal policy?
A) crowding out,a drop in the bucket,a matter of timing,and real shocks
B) poor information,the multiplier effect,the bandwagon effect,and election timing
C) sticky wages,Ricardian equivalence,recognition lag,and crowding out
D) aggregate demand deficiency,unemployed resources,long-run expenses,and implementation lag

Question

Quizplus · Accepted Answer

Fiscal policy is limited by crowding out (government spending may reduce private investment), a drop in the bucket (government spending may be too small to impact the economy significantly), a matter of timing (delays in implementation can reduce effectiveness), and real shocks (fiscal policy may not address supply-side issues).

What Are the Four Major Limits to Fiscal Policy