Assume That Policy Makers Implement Fiscal Contraction Unexpectedly

question 61

Multiple Choice

Assume that policy makers implement fiscal contraction unexpectedly. Further assume that there is no expected monetary policy response to this unexpected fiscal policy. Given this information, we would expect that this will:

• A) always cause stock prices to fall.
• B) cause no changes in stock prices.
• C) tend to cause stock prices to fall if the LM curve is very steep.
• D) tend to cause stock prices to fall if the LM curve is very flat.
• E) always cause stock prices to rise.

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Definitions:

Cardiac Catheterization

A diagnostic and therapeutic procedure that involves inserting a catheter into the heart through blood vessels to diagnose and treat cardiovascular conditions.

Ultrafast CT Scan

An advanced imaging technology that provides cross-sectional, highly detailed images of the body at much quicker speeds than traditional CT scans.

Coronary Artery Bypass Graft

A surgical procedure used to treat coronary artery disease by bypassing blocked arteries to improve blood flow to the heart muscle.

Systolic

Referring to the phase of the heartbeat when the heart muscle contracts and pumps blood from the chambers into the arteries.