The use of discretionary fiscal policy to end a recession is limited because
A) the legislative process is slow.
B) potential GDP changes too rapidly.
C) the real-world multiplier is too small to have an impact on real GDP.
D) in the real world, taxes are not induced.

Question

Quizplus · Accepted Answer

Discretionary fiscal policy involves changes in government spending and taxation to influence the economy. However, implementing such policies can be slow due to the time it takes for legislation to be proposed, debated, and passed through the political process. This delay can limit the effectiveness of fiscal policy in responding quickly to economic downturns.

The Use of Discretionary Fiscal Policy to End a Recession