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Author Question: An unexpected reduction in the money supply will tend to cause A) an increase in stock prices. ... (Read 73 times)

vinney12

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on: Jun 30, 2018
An unexpected reduction in the money supply will tend to cause
 
  A) an increase in stock prices.
  B) a reduction in stock prices.
  C) no change in stock prices.
  D) an ambiguous effect on stock prices.

Question 2

What is the IS relation? Explain why IS curve is downward sloping.
 
  What will be an ideal response?


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ttt030911

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Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

The IS relation shows the combinations of the interest rate and the level of output that are consistent with equilibrium in the goods market. An increase in the interest rate leads to a decline in output. Consequently, the IS curve is downward sloping.


vinney12

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

gcook

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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