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    Question

    Which of the following is not a challenge of the fiscal policy? 

    i.             Difficulty in estimating the rate of employment  

    ii.            Time lag involved in implementation of the policy

    iii.           Increase aggregate demand may lead to unemployment

    iv            Increase in government expenses 

    A Only i Correct Answer Incorrect Answer
    B Only ii Correct Answer Incorrect Answer
    C Only iii Correct Answer Incorrect Answer
    D Only i and ii Correct Answer Incorrect Answer
    E Only ii and iii Correct Answer Incorrect Answer

    Solution

    Estimating demand of the economy is a very complex and challenging task. Because of the large complex structures there is always a lag in policy implementation. Increase demand in the economy shall lead to improving the employment scenario.

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