Which of the following statements is correct?

A. Governments have a difficult time fine-tuning the economy by using fiscal policy because of the automatic stabilizers.

B. Governments have the knowledge about how to fine-tune the economy, but the effect time lag generates a backlash from voters that makes it difficult to implement.

C. Governments have a difficult time fine-tuning the economy by using fiscal policy because there are several time lags and these are often variable.

D. Governments have learned how to use fiscal policy to fine-tune the economy.

Question

Business

Keyla Livingston

21 January, 14:00

Which of the following statements is correct?

A. Governments have a difficult time fine-tuning the economy by using fiscal policy because of the automatic stabilizers.

B. Governments have the knowledge about how to fine-tune the economy, but the effect time lag generates a backlash from voters that makes it difficult to implement.

C. Governments have a difficult time fine-tuning the economy by using fiscal policy because there are several time lags and these are often variable.

D. Governments have learned how to use fiscal policy to fine-tune the economy.

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Answers (1)

Know the Answer?

Orlando Ochoa · Answer 1

C. Governments have a difficult time fine-tuning the economy by using fiscal policy because there are several time lags and these are often variable.

Explanation:

Fiscal policy includes two important tools, one is taxation and the other is government spending, the balance of which is essential for the sustainable economy, however the collection of expected tax and the nature of spending (also include the priorities) takes time and certain variable factors e. g. economic growth (GDP), employment, inflation, etc makes it difficult for the government to fine tune the economy.