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Fiscal policy a) if discretionary, only involves changing taxes. b) is difficult to implement...

Question:

Fiscal policy

a) if discretionary, only involves changing taxes.

b) is difficult to implement because of time lag problems.

c) if automatic, is destabilizing.

d) is conducted by the President and Congress.

e) a. and c.

f) b. and d.

Fiscal Policy:

Fiscal policy involves the manipulation of government expenditure and taxes to attain some macroeconomic objectives in the economy, such as full employment and price stability. It is a demand-side policy that uses government spending and taxes to influence the aggregate demand in the economy.

Answer and Explanation:

The correct answer is f) b. and d.

  • b) is difficult to implement because of time lag problems.

and

  • d) is conducted by the President and Congress.

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What is Fiscal Policy?

from Political Science 102: American Government

Chapter 14 / Lesson 3
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