The Expected Effects of Fiscal Contraction Are

question 134

Multiple Choice

The expected effects of fiscal contraction are

• A)higher real interest rates.
• B)exchange rate depreciation.
• C)increased trade deficit.
• D)All of these responses are correct.

Identify the impact of flotation costs on the cost of new equity and preferred stock.

Apply tax considerations to understand the after-tax cost of debt.

Forecast the cost of retained earnings for companies not currently paying dividends.

Analyze the relationship between market risk (beta), risk-free rate, market risk premium, and their impact on a firm's cost of capital.

---

Definitions:

Enforce Laws

The act of implementing and ensuring compliance with legal statutes by authorized entities such as police and regulatory agencies.

Constitutionally Bound

Being constitutionally bound means being legally obligated to adhere to the guidelines and limitations set forth by a constitution, the supreme law of the land.

Veto Power

The authority possessed by a person or body to unilaterally stop or reject a legislative act or decision.

Congress

The national legislative body of the United States, consisting of two houses: the Senate and the House of Representatives.