While there are intense debates among macroeconomists regarding the effectiveness of expansionary fiscal policy during a severe recession, both the Keynesian and non-Keynesian economists agree that fiscal policy is subject to some limitations as a stabilization tool.
Which of the following issues do most macroeconomists widely agree upon?
a. An increase in government spending will not stimulate aggregate output during a recession.
b. Government should increase its spending during a severe recession because the crowding-out will be minimal and will not negatively affect long-term growth.
c. Discretionary fiscal policy is less effective than is implied by the early Keynesian view.
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