A Problem That Makes Fiscal Policy Less Effective Is That

question 125

Multiple Choice

A problem that makes fiscal policy less effective is that:

• A) fiscal policy must be offset by monetary policy.
• B) government spending is a relatively small portion of GDP.
• C) government spending does not directly affect aggregate demand.
• D) higher taxes or increased borrowing to fund government spending can reduce aggregate demand.

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Definitions:

Test of Wills

A situation or contest in which individuals or groups challenge each other's resolve or determination.

Abundant Resources

A situation where there is a plentiful supply of resources, materials, or assets available for use or consumption.

Virtual Negotiation

The process of discussing and arriving at a mutual agreement through electronic means, without meeting in person.

Virtual Communication

Exchanging information and ideas through electronic means without physical presence.