Which Statement Does NOT Limit the Effectiveness of Fiscal Policy

question 203

Multiple Choice

Which statement does NOT limit the effectiveness of fiscal policy?

• A) Changes in private spending offset the effects of government spending or taxation.
• B) The size of government is small in comparison with the economy as a whole.
• C) Fiscal policy is subject to long and uncertain lags.
• D) Government spending and taxes have little effect on aggregate demand.

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Definitions:

Outstanding Performances

Exceptionally good or impressive acts or displays, often exceeding the norms or expectations.

Decline

A gradual decrease in quality, quantity, or importance.

Statistical Significance

A statistical statement of how likely it is that an obtained result occurred by chance.

Normal Curve

A symmetrical, bell-shaped curve that represents the distribution of many types of data where most values cluster around a central mean.