If Lags Cause the Effects of Fiscal Policy to Be

question 49

Multiple Choice

If lags cause the effects of fiscal policy to be delayed for a long period of time,

• A) the policy will magnify recessions and eliminate expansion.
• B) there is no way the policy can smooth out the business cycle.
• C) the policy will magnify expansions and eliminate recessions.
• D) fiscal policy will do nothing to the economy.
• E) there is a risk that the policy can actually magnify the business cycle.

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