During which time will fiscal policy be the most effective?
A) Normal times
B) Times of war
C) In the middle of expansions
D) Times of stagflation

Question

Quizplus · Accepted Answer

Fiscal policy is most effective during times of war as the government has more flexibility to increase spending and run larger deficits without causing inflationary pressures. During times of war, the government can utilize fiscal policy to stimulate economic activity to support the war effort.

During Which Time Will Fiscal Policy Be the Most Effective