An economy is undergoing a monetary contraction. Which variable represents it and in which way does it change? Group of answer choices expectations improve expectations worsen worker productivity improves productivity worsens government spending increases government spending decreases interest rate increases interest rate decreases inflation speeds up inflation slows down expenditure increases expenditure decreases Flag question: Question 2 Question 2 0.3 pts Before the markets have a chance to react and adjust the prices, one explained variable reacts to the event above. Two things are taking place in the economy: - People carry out expenditure that consists of Y = C+I+G+(X-M) - Firms determine whether they should hire or fire workers and that determines the output (which is also Y). Which of these two processes is affected by the event above and in which way? Group of answer choices expenditure increases expenditure decreases output increases output decreases Flag question: Question 3 Question 3 0.3 pts Why did the variable above change the way you indicated? (Again, the markets haven't adjusted the price level and inflation yet) Group of answer choices the change in the interest rate made borrowing easier the change in the interest rate made borrowing harder the change in the budget, G-T, increased the national income the change in the budget, G-T, decreased the national income firms hired firms fired