6. are composed of economic indices that usually reach peaks or troughs before the corresponding movements in economic activities 7. By 8. The difference between the interest rate and the inflation rate reflects the 9. f interest ratesdueto an increase in inflation and corporate earningsstock prices might stay government bonds, the Federal Reserve supplies excess liquidity to the market. return. fairly stable. 10. If the Federal Reserve pursues an expansionary monetary policy, interest rates will and inflation will 11. The relationship between "market capitalization rate" and "cost of equity" would be similar to that between "plowback ratio" and". One of the most widely used contractionary fiscal policy tools is Based on the constant growth dividend discount model, PE ratio tends to be higher if inflation is__ ratio". 12. budget deficits. 13. because inflation affects to become lower. 14. industries will most likely excel when the economy is at the peak; but when the economy is at the trough industries will most likely be the best choice for investment. 15. According to the efficient market hypothesis, stock prices follow a walk, and stock prices will adjust when new information arrives