The modern synthesis view of fiscal policy stresses
A) how easy it is to time fiscal policy changes so they exert a stabilizing influence on the economy.
B) the ineffectiveness of fiscal policy, even during periods of widespread unemployment.
C) the difficulties involved in timing fiscal policy changes so they will exert a stabilizing impact on the economy.
D) that automatic stabilizers do not help smooth fluctuations in the economy.

Question

Quizplus · Accepted Answer

The modern synthesis view of fiscal policy acknowledges the difficulties involved in timing fiscal policy changes so they will lead to a stabilizing impact on the economy. Automatic stabilizers, which are built-in features of the tax and transfer system that automatically stimulate aggregate demand during recessions and restrain it during expansions, are considered helpful in smoothing fluctuations in the economy. However, discretionary fiscal policy changes are difficult to implement in a timely and effective manner.

The Modern Synthesis View of Fiscal Policy Stresses