How long does fiscal policy affect the economy?
A)only in the short run
B)only in the long run
C)in both the short and long run
D)in neither the short nor long run

Question

Quizplus · Accepted Answer

Fiscal policy can affect the economy in both the short and long run. In the short run, changes in government spending and taxation can have an immediate impact on aggregate demand and can help stabilize the economy during a recession or inflationary period. In the long run, fiscal policy can influence factors like productivity, labor supply, and overall economic growth. However, the effectiveness of fiscal policy can vary depending on factors like the strength of the economy and the responsiveness of consumers and businesses to changes in policy.

How Long Does Fiscal Policy Affect the Economy