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15.6 Practical problems with discretionary fiscal policy  (Page 6/14)

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  • Card 6 / 14:
    What would happen if expansionary fiscal policy was implemented in a recession but, due to lag, did not actually take effect until after the economy was back to potential GDP?

    Prices would be pushed up as a result of too much spending.

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Source:  OpenStax, University of houston downtown: macroeconomics. OpenStax CNX. May 28, 2014 Download for free at http://legacy.cnx.org/content/col11653/1.3
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