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:

Linear Programming

A mathematical technique used for optimizing resource allocation decisions subject to certain constraints.

Markov Analysis

A mathematical technique used to predict the future behavior of a system based on its current state and known transition probabilities.

HR Supply Forecasting

The process of predicting the future availability of human resources in the organization in terms of quantity and quality.

HR Supply

The available pool of candidates that an organization's human resources department can draw upon to fill positions.