A reason why discretionary fiscal policy might move the economy away from potential GDP instead of toward potential GDP is that
A) economic forecasts consistently underestimate the impact of fiscal policy.
B) it is difficult to know whether real GDP is above or below potential GDP.
C) during a recession, politicians prefer increases in government spending over decreasing taxes.
D) government programs automatically move real GDP away from potential GDP.
E) government programs are always expansionary.
B
You might also like to view...
In the past few centuries, choices have led to a substantial decline in the standards of living around the globe
Indicate whether the statement is true or false
The world's number one economic power, in terms of total output, is
A. the United States. B. Germany. C. China. D. Japan.
A chart that lists how much of a good a supplier will offer at various prices:
a. subsidy b. supply schedule c. law of supply d. elasticity of supply e. excise tax
The production possibility curves of two countries are given below:LegolandElmolandChocolateTextilesChocolateTextiles3006002020301515302020060030Refer to the production possibility curves of the two countries. Without trade, the most each country could produce would be:
A. 30 chocolate and 30 textiles. B. 60 chocolate and 60 textiles. C. 20 chocolate and 20 textiles. D. 15 chocolate and 15 textiles.