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Suppose the government announces that, based on a just-completed survey, the growth rate in the economy is likely to be 2 percent in the coming
Suppose the government announces that, based on a just-completed survey, the growth rate in the economy is likely to be 2 percent in the coming year, as compared to 5 percent for the year just completed. Explain why the market will increase, decrease or remain the same under this scenario in terms of risk and reward. Is the market rational or not?
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