Which of the Following Is Not a Weakness of Fiscal

question 26

Multiple Choice

Which of the following is not a weakness of fiscal policy as a tool of economic stabilization?

• A)It is ineffective in dealing with stagflation.
• B)Its correct implementation depends on an accurate estimate of potential output.
• C)It is subject to lags.
• D)It affects only aggregate demand but does not have any impact on aggregate supply.
• E)Households may not respond to changes they perceive as permanent.

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