2.docx - Chapter 12 1.1 False 1.2 Volatile 1.3 John Maynard...

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Chapter 12 1.1 False 1.2 Volatile 1.3 John Maynard Keynes 1.4 Pro-cyclical 1.5 Accelerator theory of investment states that investment spending in current time period is directly related to expectation with respect to future growth of real GDP. 2.1 181.82 2.2 181.41 2.3 Decreases 2.4 Fall 2.8 Present value of $1,000 a year for 10 years was less than $10,000. 3.1 7% 3.2 Decreases 3.9 a. stock prices tend to rise when interest rate fall b. stock prices tend to rise when expected corporate earnings rise 4.6 a. Gain=1,200-1,000=200 Percentage gain=200/1000*100%=20% Loss=1,000-900=100 Percentage loss=100/1000*100%=10% b. own investment=50 Gain=250-50=200 Percentage gain=200/50*100%=400% Percentage loss=100/50*100%=200% 4.7 Some borrowers had limited ability to repay their mortgages and
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