Assume Individuals Consider Only the Long Run Effects of Changes

question 36

Multiple Choice

Assume individuals consider only the long run effects of changes in future macro variables when forming expectations of future output and future interest rates.Suppose individuals expect future government spending to increase.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:

Radical Reconstruction

The period after the American Civil War during which the federal government took direct control over the former Confederate states to enforce the rights of formerly enslaved people.

Railroad Construction

The process of building the infrastructure necessary for train travel, including tracks, stations, and bridges.

Society

A group of individuals involved in persistent social interaction, or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations.

Scalawags

Southern white Republicans—some former Unionists—who supported Reconstruction governments.