The various time lags involved with fiscal policy imply that
A) fiscal policy is effective only slowly, but the slowness ensures that it is effective in the long run.
B) fiscal policy is most effective as a short-run measure to fine tune the economy's quarterly ups and downs.
C) fiscal policy may often be destabilizing if the policy effects occur after the need is over.
D) when fiscal policy is carefully coordinated, it can quickly move to keep the economy at the full-employment level of real GDP.
Correct Answer:
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Q182: A problem with using fiscal policy to
Q183: Fiscal policy may end up being destabilizing
Q184: The recognition time lag is the time
Q185: When data on the economy requires some
Q186: The amount of time that it takes
Q188: The amount of time that elapses between
Q189: In January 2009, the President submitted a
Q190: Once either expansionary or contractionary fiscal policy
Q191: The recognition time lag recognizes that it
Q192: Discretionary fiscal policy
A) may not have desired
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