Assume Individuals Consider Only the Long Run Effects of Changes

question 35

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 current government spending increases and that individuals expect future government spending to increase.Given this information,we know with certainty that

• A)current output and the current interest rate will both increase.
• B)current output will not change.
• C)future expected output will decrease.
• D)future expected output will not change.

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Definitions:

Sori

Clusters of sporangia, often found under fern leaves, where the spores are produced.

Ferns

A group of non-flowering vascular plants that reproduce via spores and have leaves typically referred to as fronds.

Fronds

The leaf-like parts of ferns and some other plants, often large and divided into sections.

Homospory

Production of one type of spore that gives rise to a bisexual gametophyte. Compare with heterospory.