An unexpected fall in GDP growth should send bond prices __________ and stock prices __________
A) up; up
B) up; down
C) down; up
D) down; down
B
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A savings and loan strives for a 6% real return on its loans and estimates a 7% annual rate of inflation. It should therefore charge its borrowers a nominal interest rate of
A) 13%. B) 7%. C) 6%. D) 1.17%. E) 1%.
Under the expectations theory if market participants expect that future short-term rates will be higher than current short-term rates, the yield curve will
A) slope upward. B) slope downward. C) be flat. D) slope upward, slope downward, or be flat, depending on risk, liquidity, cost of information, and tax considerations.
The principle of comparative advantage essentially states that
A) there are some goods for which the opportunity costs of production are the same regardless of who produces them. B) some goods have high opportunity costs and low absolute costs. C) specialization can reduce output rather than increase it. D) total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good.
A regulatory budget would
A. provide an accounting of government regulation. B. be difficult to compute. C. have to be attempted unofficially. D. all of these answer options are correct.