Which of the following is a limitation of discretionary fiscal policy?
I.lawmaking lags
Ii.estimating potential GDP
Iii.income gap
A)i only
B)ii only
C)iii only
D)i and ii
E)i,ii,and iii

Question

Quizplus · Accepted Answer

Limitation I, lawmaking lags, refers to the time it takes for fiscal policy to be implemented by Congress and signed into law by the President. This can lead to delays in policy changes, which can limit the effectiveness of discretionary fiscal policy. 
Limitation II, estimating potential GDP, refers to the difficulty in accurately determining the maximum sustainable level of output for the economy. This can make it harder for policymakers to determine the appropriate level of government spending or taxation needed to achieve policy goals. 
Limitation III, income gap, is not a limitation of discretionary fiscal policy, but rather a potential outcome of economic conditions and policy decisions. Therefore, the best choice is D, as it correctly identifies the two limitations of discretionary fiscal policy listed in the question.

Which of the Following Is a Limitation of Discretionary Fiscal