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

question 43

Multiple Choice

For this question,assume that the Fed is expected to respond to any event by keeping output constant (i.e.,equal to its initial level) .An unexpected increase in government spending 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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