Suppose the central bank implements a monetary contraction that is fully expected by financial market participants. Given this information, we would expect
A) stock prices to rise.
B) stock prices to fall.
C) stock prices to remain unchanged.
D) an ambiguous effect on stock prices.
E) stock prices to fall and the interest rate to rise.
C
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Even with a tax, the price that consumers pay will be higher than what producers receive.
A. True B. False C. Uncertain
Which of the following is not consistent with perfect competition?
a. all firms face the same costs. b. firms cannot determine the price of the goods they sell. c. the marginal product of labor is diminishing. d. firms negotiate the same wages for different workers.
An increase in the demand for a product will cause the
a. demand for and prices of the resources used to produce the product to increase. b. demand for and prices of the resources used to produce the product to decrease. c. demand for and prices of the resources used to produce the product to remain unchanged. d. price of the product to decrease.
Suppose people on diets buy the bulk of the ground chicken and ground turkey sold in the U.S., and they use either interchangeably, as a substitute in recipes for ground beef. If the price of ground turkey rises and the price of ground chicken does not, then CPI will
A. overstate inflation because of the issue of substitution. B. understate inflation because of the issue of substitution. C. overstating inflation because of the issue of missing "where people shop." D. understating inflation because of the issue of missing "where people shop."