Weaknesses of Demand-Side Policies
- Time Lags - Demand side policies are useful for getting out of a recession, but by the time the government is able to determine where the country's economy is located, it is too late to fix things.
- Data lags - The amount of time it takes to gather data on the economy, it can also be too late to fix the problems.
- Political lags - By the time politicians get through lengthy negotiations, the economy could have changed, and their policies could be ineffective.
- Implementation lag -The time it takes for money to be printed and spread into the economy, can also be too late.
- It can cause inflation.
- "Crowding out" (see above)
- Can cause a budget deficit - The governement spends money that it does not have and has to borrow money that probably has interest on it.