« previous next »

Author Question: Suppose a cut in government spending occurs that is at least partially unexpected. Explain what ... (Read 55 times)

jrubin

  • Hero Member
  • *****
  • Posts: 552
on: Jun 30, 2018
Suppose a cut in government spending occurs that is at least partially unexpected. Explain what effect this will have on stock prices.
 
  What will be an ideal response?

Question 2

A fiscal contraction will tend to cause which of the following to occur?
 
  A) a reduction in the interest rate and a reduction in investment
  B) a reduction in the interest rate and an upward shift in the LM curve
  C) a reduction in the interest rate and an ambiguous effect on investment
  D) no change in output if the Fed simultaneously pursues contractionary monetary policy


CharlieArnold

  • Sr. Member
  • ****
  • Posts: 319
Reply #1 on: Jun 30, 2018
Answer to Question 1

Output falls and interest rates fall. Here, the effects are ambiguous. The drop in the interest rate will raise stock prices while the drop in Y will lower them.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

No drugs are available to relieve parathyroid disease. Parathyroid disease is caused by a parathyroid tumor, and it needs to be removed by surgery.

Did you know?

As many as 20% of Americans have been infected by the fungus known as Histoplasmosis. While most people are asymptomatic or only have slight symptoms, infection can progress to a rapid and potentially fatal superinfection.

Did you know?

Sildenafil (Viagra®) has two actions that may be of consequence in patients with heart disease. It can lower the blood pressure, and it can interact with nitrates. It should never be used in patients who are taking nitrates.

Did you know?

A recent study has found that following a diet rich in berries may slow down the aging process of the brain. This diet apparently helps to keep dopamine levels much higher than are seen in normal individuals who do not eat berries as a regular part of their diet as they enter their later years.

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

This graphic illustrates the original systems model of politics advanced by David Easton. Politics This graphic illustrates the original systems model of politics advanced by David Easton. Politics
Write a net ionic equation for the precipitation reaction that occurs. Write a net ionic equation for the precipitation reaction that occurs.
Please explain the different Rf values for xanthophyll’s in paper chromatography compared to ... Please explain the different Rf values for xanthophyll’s in paper chromatography compared to ...
Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ... Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ...
Increase in total spending in presidential campaigns, 1976-2020 Increase in total spending in presidential campaigns, 1976-2020
Immune-to-brain signaling occurs in response to infection, injury, and inflammation that occur in pe Immune-to-brain signaling occurs in response to infection, injury, and inflammation that occur in pe
Video: hGH (protein synthesis, growth and development)

For a complete list of videos, visit our video library