If Interest Rates and Output Rises,then

question 16

Multiple Choice

If interest rates and output rises,then

• A)government spending may have fallen.
• B)the money supply may have risen.
• C)taxes may have risen.
• D)expectations may have risen.
• E)none of the above.

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Definitions:

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Market Price

The existing rate at which a good or service is available for buying or selling.

Call Option

A financial contract granting the buyer the right, but not the obligation, to buy an underlying asset at a specified price within a certain period.

Exercise Price

The price at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.