Changes in stock market prices:
A. do not greatly impact the macroeconomy and used alone are not reliable predictors of the future health of the economy.
B. greatly impact the macroeconomy but used alone are not reliable predictors of the future health of the economy.
C. greatly impact the macroeconomy and used alone are reliable predictors of the future health of the economy.
D. do not greatly impact the macroeconomy but used alone are reliable predictors of the future health of the economy.
Answer: A. do not greatly impact the macroeconomy and used alone are not reliable predictors of the future health of the economy.
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
A manufacturer of grenade launchers estimates that the probability of a fatal accident caused by the design of its product is 1/80,000 and the value of a life lost is $2 million
The manufacturer can change the design to eliminate that chance for $20 per grenade launcher and is prepared to incorporate all cost-justified precautions. Will the manufacturer change the design? What would the benevolent social planner think about the manufacturer's decision if the true value of a life is actually $1.5 million?
Explain the differences between discretionary fiscal policy and automatic stabilizers, and give one example of each
What will be an ideal response?
An increasing-cost industry will have
A) a perfectly elastic long-run supply curve. B) a perfectly inelastic long-run supply curve. C) an upward sloping supply curve in the long run. D) an upward sloping demand curve in the long run.