When Using Discretionary Fiscal Policy to Counter a Fluctuation in the Economy

question 61

Multiple Choice

When using discretionary fiscal policy to counter a fluctuation in the economy, policymakers should

• A)make sure the policy is carried out in a timely manner.
• B)use government purchases as an instrument only if the economy is in a recession.
• C)use taxes as an instrument only if the economy is in a boom.
• D)make sure that changes in government purchases will have an effect on real GDP.
• E)make sure that transfer payments are held constant.

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