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The Various Time Lags Involved with Fiscal Policy Imply That

Question 195

Multiple Choice

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 effects of the policy kick in 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.

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