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Suppose you hear a commentator on the radio state that when interest rates fall, the stock market [the Dow Jones average say] tends to rise. {NOTE -- You are not supposed to justify the statement.} Draw a graph of such a relationship for yourself.
a. What are the axes?
b. Describe the slope - positive, negative?
c. What factors would cause a movement along the graph?
d. What factors might cause a shift in the graph? Example.
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Solution Summary
Interest Rates and Stock Market are presented.
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