Why is it difficult to implement fiscal policies? What will be ...

[tsand2]

Why is it difficult to implement fiscal policies?
 
  What will be an ideal response?

Question 2

When a bank buys a bond from the Fed
 
  A) its liabilities decrease. B) its liabilities increase.
  C) its reserves initially increase. D) its reserves initially decrease.

[prumorgan]

Answer to Question 1

One reason why fiscal policies are difficult to implement is the presence of lags, which arise due to the time involved in recognizing and responding to economic changes and the time needed for the policies to operate. A second reason is economists have incomplete information about all aspects of an economy, which limits their abilities to accurately predict economic responses to fiscal policies.

Answer to Question 2

D