Suppose Current Government Spending Decreases and That Individuals Expect Future

question 35

Multiple Choice

Suppose current government spending decreases and that individuals expect future government spending to decrease. Given this information, in which of the following cases will output in the current period be more likely to increase?

• A) Individuals consider only the short- run effects of changes in future macro variables when forming expectations of future output and future interest rates.
• B) Individuals consider only the medium- run effects of changes in future macro variables when forming expectations of future output and future interest rates.
• C) Individuals consider only the long- run effects of changes in future macro variables when forming expectations of future output and future interest rates.
• D) The output effects will be the same in A and B.
• E) The output effects will be the same in B and C.

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Definitions:

Empowerment

The process of granting individuals the power and resources to take initiative and make decisions, aiming to enhance their efficacy and involvement in organizational tasks.

Delegation

The transfer of authority and responsibility from one person to another for the completion of specific activities or tasks.

Authority and Decision

The power or right to make decisions, and the act of making choices or resolving issues, typically within an organizational context.

Delegation

The process of assigning responsibility and authority to others to carry out specific tasks while maintaining accountability for the outcome.