According to the Stabilization Policy video,one problem with discretionary fiscal stimulus is that
A) as you expand the economy, spending on foreign goods increases, thus reducing its impact on domestic output and employment.
B) consumers and businesses do not expect the policies to work, so they are unprepared to take advantage of the opportunities created.
C) it works only when monetary authorities reduce the money supply to counter inflation.
D) the employment created is primarily in government agencies and not in the private sector.
E) it leads to stabilization in the long run while allowing existing economic hardship to persist indefinitely.

Question

Quizplus · Accepted Answer

The Stabilization Policy video mentions that one problem with discretionary fiscal stimulus is that as the economy expands, spending on foreign goods also increases, thus leading to leakages and reducing the impact of the stimulus on domestic output and employment. Therefore, option A is the correct choice.

According to the Stabilization Policy Video,one Problem with Discretionary Fiscal