The Use of Fiscal Policy to Stabilize the Economy Is

question 236

Multiple Choice

The use of fiscal policy to stabilize the economy is limited because

• A)changes in government spending and tax rates have a small effect on aggregate demand.
• B)changes in government spending and tax rates have a small effect on interest rates.
• C)the legislative process can be slow, which means that it is difficult to make fiscal policy actions in a timely way.
• D)the Canada Revenue Agency (CRA)resists changes in tax rates because of all the changes they would have to make to the tax code.
• E)the federal government has very limited authority to engage in taxation and spending under the Constitution Act of 1982.

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