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 individuals expect the central bank to pursue a monetary expansion in the future. Given this information, we know with certainty that
A) current output and the current interest rate will both increase.
B) current output will decrease.
C) the current interest rate will decrease.
D) the current output effects are ambiguous.
A
Economics
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If original excess reserves are $10 million, and if the potential change in demand deposits is $153 million, then the demand deposit expansion multiplier is
A) 1.53. B) 0.65. C) 10.0. D) 0.07.
Economics
The IS curve shows that higher income levels require ________ interest rates to ensure that income equals ________
A) higher, planned autonomous spending B) higher, planned expenditures C) lower, planned autonomous spending D) lower, planned expenditures
Economics