ART 1001 Lecture : 1001 Lecture 17rev
Document Summary
Econ 2035 exam 2 review: the market and the present value of all cash flows, stocks have high variability of ror, bonds get paid before stocks. Long term corp bond int rates would be best used because they can fail and stocks are lt. Increases p because of higher productivity and higher expected future profits: adaptive suggests changes in expectations occur slowly over time. Because losses weren"t as bad as predicted: bubble is where asset price differs from its fundamental value. no. Ad-as: c = real consumption spending; disp inc, wealth, real int rate, future after tax exp. I = real investment spending; real int rate, stock p, prod cap, exp future sales. Nx = net exports; exchange rate, dom and foreign disp inc. Downward sloping because decrease in p lvl mean increase in real money supply and higher lvl of spending: autonomous monetary policy = cen bank change target inflation and political pressure.
