Which of the following is a problem associated with using ﬁscal policy?
A) Fiscal policy is usually ineffective in increasing aggregate demand.
B) The central bank may not accurately guess the size of the multiplier, rendering ﬁscal policy
C) Fiscal policy is usually more effective in increasing aggregate supply than aggregate demand.
D) The government may overestimate the optimal level of output in the economy.

Question

Quizplus · Accepted Answer

Fiscal policy can lead to issues if the government overestimates the optimal level of output, potentially causing inflation or inefficient allocation of resources.

Which of the Following Is a Problem Associated with Using