Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100. If the price level is equal to 92 at the end of the year, the real value of your savings is closest to

Suppose current government spending increases and that individuals expect future government spending to increase. 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.

If the marginal propensity to consume in a country is 0.6, then a $5,000 increase in transfer payments will lead to a _____ in real GDP

a. $8,000 increase b. $2,500 decrease c. $5,000 decrease d. $7,500 increase