Fiscal policy is most desirable if the economy returns to its long-run equilibrium immediately after a shock occurs.

Name: Fiscal policy is most desirable if the economy returns to its long-run equilibrium immediately after a shock occurs.
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Question

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Fiscal policy often takes time to implement and its effects may not be immediately felt, so it may not be the most effective response to an immediate shock. Monetary policy may be a more appropriate tool in the short-term.

Fiscal Policy Is Most Desirable If the Economy Returns to Its