Mainstream macroeconomics would suggest that fiscal policy:
A) Affects GDP and the price level through changes in aggregate supply
B) Changes aggregate demand and GDP through the multiplier process
C) Has no effect unless the fiscal policy is accompanied by changes in the money supply
D) Is relatively ineffective because the outcomes are anticipated and offset

Question

Quizplus · Accepted Answer

Mainstream macroeconomics suggests that fiscal policy changes aggregate demand which then impacts GDP through the multiplier effect.

Mainstream Macroeconomics Would Suggest That Fiscal Policy