Which of the following is not a strength of using fiscal policy as a tool to achieve macroeconomic goals?

Question

BlackTom AI · Accepted Answer

Fiscal policy is government manipulation of spending and taxation to influence aggregate demand, output, employment and sometimes aggregate supply (through investment and incentives).

1) Relevant knowledge points and concepts:
- Fiscal policy tools: government purchases, transfer payments, taxes.
- Strengths: it can directly raise aggregate demand (e.g., higher G or transfers), can be designed to improve supply-side conditions (infrastructure, R&D, subsidies), can be targeted to sectors or regions, and automatic stabilizers (unemployment benefits, progressive taxes) act quickly without new legislation.
- Weaknesses: subject to political influence, implementation and legislative lags, potential crowding out of private investment, and measurement/forecasting errors.

2) Step‑by‑step reasoning:
- Option b: “It can have positive effects on both aggregate demand and aggregate supply.” True — fiscal expansion raises AD directly; productive public investment and tax incentives can shift AS rightward over time. This is a legitimate strength.
- Option c: “It can be effective in stimulating economic activity in times of recession.” True — fiscal stimulus (increased G or transfers) raises demand and can reduce output gaps, especially when monetary policy is constrained.
- Option d: “It can be targeted at specific industries within the economy.” True — subsidies, tax credits, or industry‑specific spending can direct resources to particular sectors, making fiscal policy more targeted than broad monetary tools.

3) Calculations: none required.

4) Why the correct answer (a) is correct:
- Option a states fiscal policy “is not subject to political bias.” That contradicts reality: fiscal policy decisions are made by elected officials and are often shaped by political priorities, lobbying, and election cycles. Political bias can delay, distort, or misdirect fiscal measures (e.g., politically motivated tax cuts or pork‑barrel spending). Therefore this is not a strength.

5) Why other options are incorrect as the answer:
- b, c, and d describe genuine strengths and so are not correct responses to “which is not a strength.”

Conclusion: The statement that fiscal policy “is not subject to political bias” is false, so option a is the correct choice.

Which of the following is not a strength of using fiscal policy as a tool to achieve macroeconomic goals?单项选择题

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Which of the following is not a strength of using fiscal policy as a tool to achieve macroeconomic goals?单项选择题

类似问题

Which of the following is the least likely effect of an increase in government spending?

Which of the following is the least likely effect of an increase in government spending?

Automatic fiscal stabilisers:

​Many economists oppose a constitutional amendment that would require a balanced budget for the federal government because it would probably make the business cycle more volatile.

Permanent tax cuts have a larger impact on consumption spending than temporary ones.

Which type of fiscal policy action is most appropriate during an economic boom to prevent overheating and inflationary pressures?

Keynesians government policies include investments in capital. These include

Effective Keynesian government policies to promote long term economic growth might include:

更多留学生实用工具

希望你的学习变得更简单

Many economists oppose a constitutional amendment that would require a balanced budget for the federal government because it would probably make the business cycle more volatile.