Given the Problems with Fiscal Policy, Why Might Some Economists

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The Answer is There are numerous problems with the use of fiscal policy to stimulate the economy or to reduce inflation.However, some economists might continue to support the use of fiscal policy for its impacts on long-run aggregate supply.Government spending and tax cuts, for example, may not be effective in the short run to address high unemployment because of timing, unexpected responses by the public, conflicts with political goals, unforeseen international shocks, the crowding-out effect and the net export effect.However, in the long run, such policies can increase work incentives and encourage investment and innovation.As a result, fiscal policy can produce long term economic growth.

Given the Problems with Fiscal Policy, Why Might Some Economists

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Given the Problems with Fiscal Policy, Why Might Some Economists

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Correct Answer:
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