Assume Individuals Consider Only the Medium- Run Effects of Changes

question 21

Multiple Choice

Assume individuals consider only the medium- run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose policymakers announce a reduction in future government spending. Which of the following will occur as a result of this expected government spending reduction?

• A) A decrease in the expected future interest rate and no change in expected future output.
• B) A decrease in the expected future interest rate and an increase in expected future output.
• C) A decrease in the expected future interest rate and a decrease in expected future output.
• D) A decrease in the expected future interest rate and an ambiguous effect on expected future output.
• E) A decrease in the expected future interest rate and a constant expected future output.

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Definitions:

Stuart Hall

A British cultural theorist and sociologist who played a significant role in developing cultural studies in the UK.

Critical Communication Capacities

The ability to understand and analyze the ways that communication processes construct social realities that, over time, become common sense and taken for granted.

Common Sense

Widely held beliefs or propositions that are perceived as unquestionable truths by a particular group or society.

Male-Dominated World

A social system or environment where men hold the primary power and predominate in roles of political leadership, moral authority, social privilege, and control of property.