Suppose Stock Prices Rise

question 49

Multiple Choice

Suppose stock prices rise.To offset the resulting change in output the Federal Reserve could

• A)increase the money supply.This increase would also move the price level closer to its value before the rise in stock prices.
• B)increase the money supply.However,this increase would move the price level farther from its value before the rise in stock prices.
• C)decrease the money supply.This decrease would also move the price level closer to its value before the rise in stock prices.
• D)decrease the money supply.However,this decrease would move the price level farther from its value before the rise in stock prices.

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Definitions:

Population Growth

The increase in the number of individuals in a population, usually measured over a specific period and influenced by factors such as birth rates, death rates, and migration.

Expected Population

An estimation of a population size in the future based on current trends and changes.

GIC

Guaranteed Investment Certificate, a type of Canadian investment that offers a guaranteed rate of return over a fixed period.

Maturity Value

The total amount of principal and interest due to be paid at the end of a loan or investment period.