This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Suppose the Fed implements a monetary expansion that is at least partially unexpected. Explain what ... (Read 103 times)

sc00by25

  • Hero Member
  • *****
  • Posts: 596
on: Jun 30, 2018
Suppose the Fed implements a monetary expansion that is at least partially unexpected. Explain what effect this will have on stock prices.
 
  What will be an ideal response?

Question 2

We know with certainty that a tax increase must cause which of the following?
 
  A) an increase in investment
  B) a reduction in investment
  C) no change in investment
  D) none of the above


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

macagnavarro

  • Sr. Member
  • ****
  • Posts: 334
Reply #1 on: Jun 30, 2018
Answer to Question 1

This will cause the interest rate to fall and output to rise. The lower interest rate will increase the present value of future dividends. The increase in output will cause an increase in expected dividends because profits are now expected to be higher. Both of these effects cause stock prices to rise.

Answer to Question 2

D


sc00by25

  • Member
  • Posts: 596
Reply 2 on: Jun 30, 2018
Thanks for the timely response, appreciate it

tuate

  • Member
  • Posts: 332
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

There can actually be a 25-hour time difference between certain locations in the world. The International Date Line passes between the islands of Samoa and American Samoa. It is not a straight line, but "zig-zags" around various island chains. Therefore, Samoa and nearby islands have one date, while American Samoa and nearby islands are one day behind. Daylight saving time is used in some islands, but not in others—further shifting the hours out of sync with natural time.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

The oldest recorded age was 122. Madame Jeanne Calment was born in France in 1875 and died in 1997. She was a vegetarian and loved olive oil, port wine, and chocolate.

Did you know?

Fatal fungal infections may be able to resist newer antifungal drugs. Globally, fungal infections are often fatal due to the lack of access to multiple antifungals, which may be required to be utilized in combination. Single antifungals may not be enough to stop a fungal infection from causing the death of a patient.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

A hypothetical model of the process of cell-wall expansion. A hypothetical model of the process of cell-wall expansion.
Expansion Ratios for Liquefied Compressed Gases Expansion Ratios for Liquefied Compressed Gases
Social scientists have not done well at devising theories to explain lovely romantic moments Social scientists have not done well at devising theories to explain lovely romantic moments
Expansion factors for orifice plates Expansion factors for orifice plates
Expansion factors for venturi flowmeters Expansion factors for venturi flowmeters
Suppose a country imports televisions. The country's supply and demand curves are shown in ... Suppose a country imports televisions. The country's supply and demand curves are shown in ...
Video: Energy inputs and release in glycolysis Animation

For a complete list of videos, visit our video library