Evaluating Fiscal Policy | IB Macroeconomics

More about this content:

In this step you'll learn about the strengths and weaknesses of fiscal policy. Fiscal policy is a good way for the government to pull an economy out of recession, deal with rapid and escalating inflation, target sectors of the economy, and have a direct impact on aggregate demand. The weaknesses of fiscal policy include time lags, political constraints, crowding out, inability to deal with supply-side causes of instability, tax cuts may not be effective, and the inability to fine-tune the economy.