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    Financial Markets and Institutions Study Set 6
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    Exam 2: Determinants of Interest Rates
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    In October 1987 Stock Prices Fell 22% in One Day
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In October 1987 Stock Prices Fell 22% in One Day

Question 15

Question 15

Essay

In October 1987 stock prices fell 22% in one day and bond rates fell also. Use the loanable funds theory to explain what happened.

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The worsening of perceived future econom...

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