Suppose There Is a Fiscal Expansion in the Current Period

Multiple Choice

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 the current interest rate causes expectations of expansionary monetary policy in the future.
B) an increase in the current interest rate causes an increase in expected future interest rates.
C) an increase in current output causes an increase in expected future output.
D) Both A and B.
E) Both B and C.