Countercyclical fiscal policy has a serious problem with
A) overshooting the desired impact by a factor of 10.
B) the irreversibility of actions.
C) the tendency of the Federal Reserve to immediately counter Congressional action.
D) the courts as it has been held to be unconstitutional.
E) overshooting the desired impact by a factor of 3.

Question

Quizplus · Accepted Answer

Countercyclical fiscal policy involves government action to stabilize the economy during periods of economic downturns or recessions. However, the actions taken by the government can be irreversible, meaning that if the economy stabilizes before the effects of the policy are fully felt, the policy may lead to an overstimulation of the economy, potentially causing inflation. This makes countercyclical fiscal policy difficult to implement effectively without unintended consequences. None of the other options listed are accurate or relevant to the issue.

Countercyclical Fiscal Policy Has a Serious Problem with