Suppose Current Government Spending Increases AND That Individuals Expect Future

question 12

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 B and C.

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Definitions:

Productivity

The efficiency at which goods and services are produced, often measured as output per unit of input.

Quality of Work

The degree to which work performed meets or exceeds established standards in terms of accuracy, thoroughness, and performance efficiency.

Payroll Office

The department within an organization that is responsible for processing employee paychecks, withholding taxes, and maintaining financial records related to employment.

Human Resources

The department within an organization responsible for managing employee-related processes, including recruitment, training, and payroll.