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Assume you hear a commentator on radio state that when interest rates fall, the stock market (the Dow Jones average say) tends to rise. [NOTE -- the question DOES NOT ask you to justify the statement, only to describe the graph.] Draw a graph of such a relationship for yourself.

a) What are the axes?
b) Describe the slope -- positive or negative? Why?
c) What factors would cause a movement along the graph?
d) What factors might cause a shift in the graph?

 

International Economics, Economics

  • Category:- International Economics
  • Reference No.:- M9292920

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