Why is functional finance difficult to implement?

1. Financing the deficit often has offsetting effects, and the government doesn't always know how its policies will affect the economy.

2. Potential output is not a known quantity, and enacting spending and taxing policies is time consuming.

3. Government debt can affect private spending, and taxing and spending can negatively affect other government goals. 4.

It is unknown whether the Ricardian equivalence theorem is true.

5. The government cannot function without the popular vote, making policy difficult.

Question

Business

Kyan Meyer

26 October, 11:12

Why is functional finance difficult to implement?

1. Financing the deficit often has offsetting effects, and the government doesn't always know how its policies will affect the economy.

2. Potential output is not a known quantity, and enacting spending and taxing policies is time consuming.

3. Government debt can affect private spending, and taxing and spending can negatively affect other government goals. 4.

It is unknown whether the Ricardian equivalence theorem is true.

5. The government cannot function without the popular vote, making policy difficult.

+2

Answers (1)

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Lucia Ho · Answer 1

The right answer for the question that is being asked and shown above is that: "3. Government debt can affect private spending, and taxing and spending can negatively affect other government goals." The functional finance difficult to implement is that 3. Government debt can affect private spending, and taxing and spending can negatively affect other government goals.