True/False/Uncertain
A) Changes in expected future one-year real interest rates have a much larger effect on spending than changes in the current one-year real interest rate
B) The introduction of expectation implies that the IS curve is still downward sloping but is now much flatter
C) Current real money demand is inversely related to the future nominal interest rate
D )The rational expectations assumption implies that consumers consider the effects of future fiscal policy on output
E) Future monetary policy affects future economic activity but not current economic activity
F) Depending on its effect on expectations, a fiscal contraction may actually lead to an economic expansion
G) The very different effects of Ireland's deficit-reduction programs in 1982 and in 1987 provide strong evidence against the hypothesis that deficit reduction can lead to an expansion of output in the short run
True/False/Uncertain
A) Changes in expected future one-year real interest rates have a much larger effect on spending than changes in the current one-year real interest rate
B) The introduction of expectation implies that the IS curve is still downward sloping but is now much flatter
C) Current real money demand is inversely related to the future nominal interest rate
D )The rational expectations assumption implies that consumers consider the effects of future fiscal policy on output
E) Future monetary policy affects future economic activity but not current economic activity
F) Depending on its effect on expectations, a fiscal contraction may actually lead to an economic expansion
G) The very different effects of Ireland's deficit-reduction programs in 1982 and in 1987 provide strong evidence against the hypothesis that deficit reduction can lead to an expansion of output in the short run
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