Which of the following is NOT a weakness of fiscal policy?
A) Time lags in fiscal policy are long and variable.
B) Fiscal policy works only during periods of stagflation.
C) Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income.
D) Fiscal policy might have undesirable long-term effects on short-run aggregate supply.

Question

Which of the following is NOT a weakness of fiscal policy?  
A) Time lags in fiscal policy are long and variable. 
B) Fiscal policy works only during periods of stagflation. 
C) Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income. 
D) Fiscal policy might have undesirable long-term effects on short-run aggregate supply.

Quizplus · Accepted Answer

Fiscal policy can be weakened by time lags, impact only current income, and have long-term effects on short-run aggregate supply. However, it can be used during various economic situations, not just stagflation. Therefore, option B is the correct answer as it does not describe a weakness of fiscal policy.

Which of the Following Is NOT a Weakness of Fiscal