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If consumers and businesses became more pessimistic about the future of the economy, the government could...

If consumers and businesses became more pessimistic about the future of the economy, the government could try to stabilize output by

increasing government expenditures. The primary objection to this is that an increase in government expenditures have no impact on the economy.

increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.

increasing government expenditures. The primary objection to this is that an increase in government expenditures have no impact on the economy.

increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy.
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If consumers and businesses became more pessimistic about the future of the economy, the government could try to stabilize output by increasing government expenditures. The primary objection to this is that there are lags in implementing fiscal policy. As monetary policy shows effects faster than fiscal policy so increasing money supply will reduce the impact on the price level and real GDP and lowers interest rates.

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