1. Discretionary fiscal policy works to close a deflationary (recessionary) gap by shifting the
AD curve leftward.
AS curve leftward.
AD curve rightward.
AD curve leftward and AS curve leftward.
2. Compared to fiscal policy, monetary policy has the advantage of
being faster to implement because it cuts out the law-making time lag.
being less prone to errors in estimating potential GDP than fiscal policy.
being more accurate in forecasting future events than fiscal policy.
having a more direct impact on the economy than fiscal policy.