Which of the Following Is Not a Weakness of Fiscal

question 12

Multiple Choice

Which of the following is not a weakness of fiscal policy?

• A) The implementation of fiscal policy is difficult.
• B) Time lags in fiscal policy are long and variable.
• C) Fiscal policy works only during periods of stagflation.
• D) Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income.
• E) Fiscal policy might have undesirable long-term effects on short-run aggregate supply.

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Definitions:

Total Cost

The aggregate expenditure incurred in the production of goods or services, including both fixed and variable costs.

Bean Sprouts

The sprouted seeds of certain beans, commonly used in Asian cuisine and as a healthy ingredient in salads and sandwiches.

Firm's Production

The process or activities undertaken by a business to combine inputs like labor, capital, and materials to produce goods or services for sale.

Cournot Duopolists

Firms in a duopoly market structure, where two companies dominate, that decide on their output level assuming the other's output as given, under Cournot competition.