Question

If the expected future earnings of a company goes down, you would expect the price of its stock to

a. fall.

b. fall to zero.

c. rise.

d. be unaffected.

If you own a share of stock in a company and the risk associated with its business falls, you would expect

a. a higher dividend.

b. a capital loss.

c. a capital gain.

d. a bubble.

the implementation lag for monetary policy is shorter than for fiscal policy because

a. monetary policy changes more quickly affect behavior than fiscal policy changes.

b. it takes longer for Congress to act than the Fed.

c. fiscal policy changes more quickly affect behavior than monetary policy changes.

d. it takes longer for the Fed to act than Congress.

Answer 1

If the expected future earnings of the company goes down the price of its stock will....(a) fall.

The company can survive in the short term without profit because of the expectation of future earnings.But if future earnings goes down the stock price will surely fall.

If you own a share of a company and the risk associated with the company falls you would expect....( a) a higher dividend.This is because price of its stock will rise.

The implementation lag for monetary policy is shorter than fiscal policy because....(b) it takes longer for congress to act than the Fed.Fiscal policy needs hearing in both houses of congress and the president and monetary policy only needs the Fed to work,