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explain the yield spread and its relationship to equity prices, inflation, and real output (GDP).

explain the yield spread and its relationship to equity prices, inflation, and real output (GDP).

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Answer #1

When there is rise in the prices of equity then the inflation will also increase This is because is the money supply is increased it will lead to rise in price which result in high inflation.

There is negative relationship between the real GDP and inflation but there is positive relationship between aggregate GDP and inflation

When the price level of equity rises then there decrease in the level of real GDP and vice versa that means it has inverse relationship

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