Which one of the following is an area of continued disagreement among modern macroeconomists with regard to the use of fiscal policy?
A) Automatic stabilizers help reduce the fluctuations in aggregate demand and output.
B) It is difficult to time changes in discretionary fiscal policy in a manner that will promote stability.
C) Fiscal policy is much less potent than the early Keynesian view implied.
D) Budget deficits are a highly effective tool with which to combat a severe recession.

Question

Quizplus · Accepted Answer

There is disagreement among economists about the effectiveness of budget deficits as a tool to combat severe recessions, with some arguing they can be effective while others believe they may lead to long-term negative consequences.

Which One of the Following Is an Area of Continued