Both fiscal and monetary policies do not function as smoothly as some
would like. What are some of the drawbacks of fiscal policy?
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1. Potential side effects of reduced public spending could cripple important public services which may precipitate market failure.
2. The time it takes for the effects of the fiscal policy to set in and affect the economy may be too long and may not actually benefit the economy.
3. Increased government spending may at times result in crowding out of the private sector adn reducing it size.
4. Budget deficits may result from the fiscal policy whic may result in increased taxation in the future.
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