Assume Policy Makers Implement Fiscal Expansion Unexpectedly

question 46

Multiple Choice

Assume policy makers implement fiscal expansion unexpectedly. Further assume that monetary policy is expected to keep interest rates constant in response to this unexpected fiscal policy. Given this information, we would expect that this will cause:

• A) stock prices to rise.
• B) stock prices to remain constant.
• C) stock prices rise initially followed by decreases.
• D) stock prices to fall.
• E) an ambiguous effect on stock prices.

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Definitions:

Higher-paying Work

Employment opportunities that offer remuneration significantly above the average wage, often requiring specialized skills or higher education.

Education

The process of facilitating learning, or the acquisition of knowledge, skills, values, and habits through various methods.

Sociologist

A scientist or scholar who studies the development, structure, and functioning of human society, including social behavior, culture, institutions, and problems.

Randomization

A process of making choices or allocating resources in a manner that prevents any predictable patterns, often used in experimental designs to ensure unbiased results.