Assume individuals consider only the short run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose current taxes are cut and that individuals expect future taxes to decrease. Given this information, we know with certainty that
A) current output and the current interest rate will both increase.
B) current output will increase.
C) the current interest rate will increase.
D) the current output effects are ambiguous.
D
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Which of the following is true of fiat money?
A) Fiat money is illegal and difficult to counterfeit. B) The raw materials required for the production of fiat money are available only in a few countries. C) Fiat money is not backed by a physical commodity. D) The technology required to produce fiat money is not widely available.
The classical model differs from the Keynesian model in that
a. monetary policy does not impact output in the Keynesian model. b. the classical model focuses on the long-run and the Keynesian model focuses on the short-run. c. fiscal policy is more powerful in the classical model than in the Keynesian model. d. the classical model believes monetary policy is a powerful impact on output and fiscal policy is not. e. None of the above