Final answer:
If expansionary fiscal policy was implemented in a recession but did not take effect until after the economy was back to potential GDP, the impact would likely be minimal or have no significant effect on the economy.
Step-by-step explanation:
If expansionary fiscal policy was implemented in a recession but did not take effect until after the economy was back to potential GDP, the impact would likely be minimal or have no significant effect on the economy.
By definition, expansionary fiscal policy is designed to stimulate economic growth during a recession by increasing government spending and reducing taxes. However, if the policy is not implemented until after the economy has already recovered, it would essentially be like pouring water on a fire that is already extinguished - it would have no real impact.
The lag between implementing the policy and its effects can be due to various factors such as bureaucratic processes, legislative hurdles, or time needed for the implemented measures to take effect. However, in this specific scenario, the policy would not contribute to further recession, inflationary pressures, or stabilization of the economy, as it would be implemented after the economy has already recovered.