Stock Analysts Often Argue That Lower Interest Rates Are Good

question 178

Multiple Choice

Stock analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?

• A) No; lower interest rates will tend to slow down the economy and this will be bad for the stock market.
• B) Yes; the lower rates of interest will increase the value of future income (and capital gains) and stock prices will rise to reflect this factor.
• C) No; the lower rates of interest will reduce the value of future income (and capital gains) and this will cause stock prices to fall.
• D) Yes; the lower interest rates will cause inflation and inflation is generally good for the stock market.

Calculate opportunity cost and understand its role in determining comparative advantage.

Recognize the benefits of specialization and trade for countries involved.

Analyze scenarios to determine which country has a comparative or absolute advantage in the production of specific goods.

Apply the theory of comparative advantage to solve problems related to international trade.

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Definitions:

Stretch Receptors

Sensory receptors that detect stretching within muscles and other tissues, sending signals to the nervous system to inform about movement and position.

Urinary Reflex

The automatic process managing the flow of urine from the bladder, involving signals between the brain and urinary system.

Sphincters

Circular muscles that maintain constriction of a natural body passage or orifice and that relax as required by normal physiological functioning.

Urinary Bladder

A muscular sac in the pelvis that stores urine until it is expelled from the body.