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:

Behaviorism

A theory in psychology that focuses on observable behaviors rather than internal processes and emphasizes the role of the environment in shaping behavior.

Toilet Training

Toilet Training is the process of teaching a young child to use the toilet for elimination, marking a key milestone in early childhood development.

Reinforcement

In behavioral psychology, a process by which a behavior is encouraged or strengthened through the administration of a stimulus or reward following the desired behavior.

Psychoanalytic Theories

A set of theories originated by Sigmund Freud that emphasize the influence of the unconscious mind on behavior.