Which of the following is a limitation of discretionary fiscal policy?
i. The legislation time lag
ii. Estimating potential GDP
iii. The income gap

Question

Quizplus · Accepted Answer

Discretionary fiscal policy faces limitations such as the legislation time lag, which refers to the delay between recognizing the need for action and the policy actually being implemented, and the difficulty in estimating potential GDP accurately, which is crucial for determining the appropriate fiscal policy stance. The income gap is not typically considered a limitation of discretionary fiscal policy itself.

Which of the Following Is a Limitation of Discretionary Fiscal