Many Economists Think Discretionary Fiscal Policy Is of Limited Effectiveness

question 145

Multiple Choice

Many economists think discretionary fiscal policy is of limited effectiveness in stabilizing the economy because
1) the multiplier effects associated with fiscal policy take a long time;
2) changes in government spending and taxation are too small in relation to the size of the economy to have much effect;
3) there are long and uncertain lags in implementing fiscal policy.

• A)1 only
• B)2 only
• C)3 only
• D)1 and 2
• E)1 and 3

---

Definitions:

First-In, First-Out

An inventory accounting method where the oldest items (first-in) are sold or used first (first-out), affecting the cost of goods sold and ending inventory valuation.

Cost Reconciliation Report

A financial report that reconciles the beginning and ending costs for a period, often used in manufacturing to track material, labor, and overhead.

Beginning Work

The initial stage or tasks that start a process, often referring to the beginning inventory or work-in-process in manufacturing.

Costs Added

Expenses that have been incurred additionally, often related to production or acquisition of inventory.