Assume Individuals Consider Only the Medium Run Effects of Changes

question 39

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 individuals expect future taxes to decrease.Given this information,individuals will expect

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

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Definitions:

Reverberation

The persistence of sound after the source has stopped, caused by reflection of sound waves.

Retinal Disparity

The slight difference in the visual images that reach each eye, leading to the perception of depth.

Curvature

The degree to which a surface or line deviates from being flat or straight, often used in mathematics, physics, and various fields of engineering.

Pupil

The opening in the iris of the eye that regulates the amount of light reaching the retina.