Suppose Current Government Spending Increases and That Individuals Expect Future

question 49

Multiple Choice

Suppose current government spending increases and that individuals expect future government spending to increase. 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 C.
• E) The output effects will be the same in B and C.

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Definitions:

Indian Child Welfare Act

A federal law enacted in the United States to protect the best interests of Indian children and promote the stability and security of Indian tribes and families.

Tribal Authority

The power and influence held by leaders within indigenous or tribal societies, often rooted in tradition and communal consensus.

Dominant Culture

The set of cultural practices, beliefs, and values that are powerful or widespread enough to influence the collective behavior of a society or group.

Status

The relative social, professional, or other standing of someone or something.