Answer: One limitation of fiscal policy is the fact that implementing fiscal policy is slow and so it is difficult to have the proper policy in place. Another limitation is that at times it is difficult to determine if GDP is less than, equal to, or greater than potential GDP. As a result, it is difficult to determine if fiscal policy should be expansionary or contractionary.
Answer:
ReplyDeleteOne limitation of fiscal policy is the fact that implementing fiscal policy is slow and so it is difficult to have the proper policy in place. Another limitation is that at times it is difficult to determine if GDP is less than, equal to, or greater than potential GDP. As a result, it is difficult to determine if fiscal policy should be expansionary or contractionary.