Fiscal policy may end up being destabilizing to an economy because
A)there is never a long enough time lag.
B)the economy is almost always at full employment.
C)the President may have different goals than Congress.
D)various time lags associated with fiscal policy cause the policy changes to take effect too late to solve the problem it was supposed to solve.

Question

Quizplus · Accepted Answer

Fiscal policy can be destabilizing because the time lags associated with it may cause the policy changes to take effect too late to solve the problem it was intended to solve. This delay can lead to the policy being ineffective or even counterproductive, potentially worsening the situation. Additionally, it can be difficult for policymakers to predict the exact timing and magnitude of the economic impact of their fiscal policy decisions, making it challenging to implement an effective and timely response to economic conditions.

Fiscal Policy May End Up Being Destabilizing to an Economy