Assume That the RBA Is Expected to Respond to Any

question 23

Multiple Choice

Assume that the RBA is expected to respond to any event by keeping the interest rate constant (i.e., equal to its initial level) . An unexpected tax increase will cause:

• A) stock prices to fall.
• B) stock prices to rise.
• C) no change in stock prices.
• D) an ambiguous effect on stock prices.
• E) stock prices fall only if goods prices fall.

---

Definitions:

Psychological Defenses

Mechanisms employed by the psyche to protect the individual from anxiety-producing thoughts or feelings.

Aggression

A behavior aimed at causing harm or pain to others.

Goal Setting

The process of identifying specific, measurable, attainable, relevant, and time-bound objectives to achieve desired results.

Profit-Sharing Plan

A company program that distributes a portion of its profits to its employees, typically in the form of bonuses or as part of retirement benefits.