A problem with the use of aggregate demand management to stabilize the business cycle is that
A)monetary policy isn't available to use when interest rates are already rising because of higher inflation.
B)fiscal policy takes a long time to have any impact on the economy.
C)monetary policy is difficult to use, because the decision-making process is long and complicated.
D)the precise amount that output will change in response to monetary or fiscal policy isn't known.

Question

Quizplus · Accepted Answer

The precise amount that output will change in response to monetary or fiscal policy isn't known, which makes it difficult to predict the exact impact of aggregate demand management on stabilizing the business cycle. This uncertainty can make it challenging to fine-tune policies in a way that effectively stabilizes the economy.

A Problem with the Use of Aggregate Demand Management to Stabilize