Assume Individuals Consider Only the Long Run Effects of Changes

question 20

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:

Nutritious

Containing substances that a body needs to stay healthy and function properly, typically used in the context of food and diets.

Perceptual Map

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Perceptual Map

A visual representation used in marketing to depict how consumers perceive a brand or product in relation to competitors, often based on attributes like quality and price.