Question

Fiscal policy is: Select one:
a. less effective in dealing with real shocks than aggregate demand shocks.
b. not effective in dealing with either real shocks or aggregate demand shocks
c. equally effective in dealing with real shocks as with aggregate demand shocks.
d. more effective in dealing with real shocks than aggregate demand shocks.

Answer 1

Answer:

d. more effective in dealing with real shocks than aggregate demand shocks.

Explanation:

Fiscal policy are more effective in dealing with real policy shocks than the monetary policy. The correct answer is d. more effective in dealing with real shocks than aggregate demand shocks.