Suppose there is a fiscal expansion in the current period. This fiscal expansion will tend to cause a smaller increase in current output when
A) an increase in current output causes an increase in expected future output.
B) an increase in the current interest rate causes expectations of expansionary monetary policy in the future.
C) an increase in the current interest rate causes an increase in expected future interest rates.
D) both A and B
E) all of the above
Question 2
Junk bonds, bonds with a low bond rating, are also known as
A) high-yield bonds.
B) investment grade bonds.
C) high quality bonds.
D) zero-coupon bonds.
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