Which of the following was an argument in favor of using discretionary fiscal policy in fighting the Great Recession?
A)Monetary policy could not be effective, since interest rates were near zero.
B)If taxes were increased, the budget could be balanced.
C)If government spending decreased, the budget surplus would increase.
D)The lags associated with monetary policy would be destabilizing.

Question

Quizplus · Accepted Answer

With interest rates near zero, monetary policy had limited effectiveness in stimulating the economy. Discretionary fiscal policy, on the other hand, could directly increase government spending and provide stimulus to the economy.

Which of the Following Was an Argument in Favor of Using