Suppose Current Government Spending Decreases AND That Individuals Expect Future

question 34

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 decrease?

• 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:

Forests

Regions dominated by trees and other vegetation, playing a crucial role in carbon sequestration and biodiversity maintenance.

Twentieth Century

The era spanning from January 1, 1901, to December 31, 2000, marked by significant technological, social, and political changes.

Agricultural Technologies

Innovations and technologies developed to improve efficiency, productivity, and sustainability in agriculture.

Productivity Per Acre

The measure of output (such as crops) produced per acre of land.