Discretionary Fiscal Policy

question 226

Multiple Choice

Discretionary fiscal policy

• A) may not have desired effects on real GDP because of the time lags.
• B) may not have desired effects on real GDP because it leads to increases in aggregate demand.
• C) may not have desired effects on real GDP because it leads to decreases in aggregate demand.
• D) would have a larger effect on real GDP if the multiplier was smaller.

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