Suppose current government spending decreases and that ...

[a0266361136]

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.

Question 2

Which of the following represents the participation rate?
 
  A) the ratio of the number employed to the size of the labor force
  B) the ratio of the number employed to the civilian noninstitutional population
  C) the ratio of the labor force to the civilian noninstitutional population
  D) the ratio of the labor force to the total number of employed and unemployed workers

[taylorsonier]

Answer to Question 1

C

Answer to Question 2

C