Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except
A)the difficulty of estimating the natural rate of unemployment
B)the time lags involved in implementing fiscal policy
C)the existence of possible feedback effects of fiscal policy on aggregate supply
D)the distinction between current and permanent income
E)the problems of inflation and unemployment were basically solved

Question

Quizplus · Accepted Answer

The problems of inflation and unemployment were not solved during the 1970s, but instead, there was a phenomenon known as stagflation, meaning a combination of high inflation and high unemployment, which made it challenging to implement effective discretionary fiscal policies. The other options listed were all valid concerns about discretionary fiscal policy during the 1970s.

Economists and Policy Makers Questioned the Effectiveness of Discretionary Fiscal