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You are working for an economist who asks you the following: 9. The two components of fiscal policy are: a. Money supply and taxes C

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You are working for an economist who asks you the following: 9. The two components of fiscal policy are: a. Money supply and taxes C Taxes and spending c. Spending and money supply d. Money supply and GDP 10. T/F If the fed raises rates and the government increases taxes that should help the economy 11. T/F Companies raise capital by issuing stocks and bonds, which is why the equation assets - liabilities equity holds true 12. If I have an investment that earns 8% on average which has a standard deviation of 14, how much should I only lose 95% of the time? a. 10% b. 12% c. 20% d. 6% 13. T/F of investment A earned 10% and investment B earned 20% and my overall return was 15%, then I invested 50% of my capital in each. Bob just got hired as a bond consultant and his boss asks him the following questions: 14. If you want to keep your duration low you should look to buy: a. long maturity bonds with a high coupon b. Short maturity bonds with a low coupon c. Treasury bonds d. High coupon bonds with a short maturity 15. The economy is slowing down so the Fed starts to lower rates. What should you do? a. Buy 30 yr T bonds b. Buy T bills c. Buy high yield bonds rated BB d. Buy stocks

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