Suppose Policy Makers Implement a Fiscal Expansion That Is NOT

question 55

Multiple Choice

Suppose policy makers implement a fiscal expansion that is NOT fully anticipated by financial market participants.We know that this will

• A)always cause stock prices to fall.
• B)always cause stock prices to rise.
• C)tend to cause stock prices to rise if the LM curve is very flat.
• D)tend to cause stock prices to rise if the LM curve is vertical.