To be effective,countercyclical fiscal policy must be temporary.

Question

Quizplus · Accepted Answer

Countercyclical fiscal policy involves government actions to stabilize the economy during times of economic downturns or recessions. This usually involves increased government spending and/or tax cuts to stimulate demand and boost economic growth. However, these measures must be temporary so as not to create long-term budget deficits or inflation. If countercyclical fiscal policy is sustained for too long, it can lead to economic imbalances and instability. Therefore, it is considered more effective when used as a short-term measure to address economic fluctuations.

To Be Effective,countercyclical Fiscal Policy Must Be Temporary