Suppose Current Government Spending Decreases and That Individuals Expect Future

question 20

Multiple Choice

Suppose current government spending decreases and that individuals expect future government spending to decrease.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 B and C.

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Definitions:

Constructive Disagreement

Situations where differing opinions lead to positive outcomes through collaborative problem-solving and innovation.

Functional Conflict

A healthy, constructive disagreement between two or more people.

Interpersonal Conflict

Conflict that occurs between two or more individuals.

Intergroup Conflict

Conflict that occurs between groups or teams in an organization.