For This Question,assume That the Fed Is Expected to Respond

question 59

Multiple Choice

For this question,assume that the Fed is expected to respond to any event by keeping the interest rate constant (i.e.,equal to its initial level) .An unexpected tax cut 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.

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Definitions:

Single Tax

A system in which only one type of tax is levied, often proposed to simplify tax systems.

Small Business Administration (SBA)

A U.S. government agency that provides support to entrepreneurs and small businesses, including loans and grants.

Loan Guarantees

Agreements in which a guarantor, usually a government or financial institution, agrees to pay back a loan if the borrower defaults.

Business Incubators

Organizations designed to accelerate the growth and success of startup and early-stage companies by providing resources such as space, capital, coaching, and networking connections.