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Which of the following is a common criticism of the use of fiscal policy?
If no fiscal policy is used, the economy will never be able to correct itself, even partially.
A government borrowing money to finance fiscal policy can crowd out investments.
Expansionary fiscal policy can help pull an economy out of a recession.
Fiscal policy is often enacted too quickly, before the market is ready for it.
A government borrowing money to finance fiscal policy can crowd out investments.
Expansionary fiscal policy requires either a cutting taxes or an increase in government spending. Increasing government spending requires the government to borrow additional funds. This increase in demand for loans results in a rising interest rate, which then limits the ability of private investors to borrow funds.
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