What key challenge is highlighted in the report concerning the global economy due to higher interest rates and weaker risk appetite?a)Increased consumer spendingb)Job creationc)Stock market volatilityd)Inflation controlCorrect answer is option 'C'. Can you explain this answer?

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What key challenge is highlighted in the report concerning the global economy due to higher interest rates and weaker risk appetite?

a)
Increased consumer spending
b)
Job creation
c)
Stock market volatility
d)
Inflation control

Correct answer is option 'C'. Can you explain this answer?

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What key challenge is highlighted in the report concerning the global ...

The report emphasizes that higher interest rates, necessary to control inflation, can lead to slower economic growth and job losses as investors become less willing to take risks, resulting in stock market volatility. This can have significant implications on investment patterns and economic stability.

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What key challenge is highlighted in the report concerning the global ...

Stock market volatility:
One key challenge highlighted in the report concerning the global economy due to higher interest rates and weaker risk appetite is stock market volatility.

Impact on investor confidence: Higher interest rates and weaker risk appetite can lead to increased volatility in the stock market, causing uncertainty and reduced investor confidence. This can result in fluctuations in stock prices and a lack of stability in the market.
Reduced investment: Investors may become more cautious and hesitant to invest in the stock market due to the increased risk and uncertainty. This can lead to reduced capital inflows and slower economic growth, as investment plays a crucial role in driving economic activity.
Global economic impact: Stock market volatility can have ripple effects across the global economy, as interconnected financial markets can transmit shocks and uncertainties. This can impact trade, investment, and overall economic stability on a global scale.
Policy challenges: Central banks and policymakers may face challenges in responding to stock market volatility caused by higher interest rates and weaker risk appetite. They may need to implement measures to stabilize the market and restore investor confidence, which can be a complex and delicate task.

In conclusion, stock market volatility is a key challenge that can arise in the global economy due to higher interest rates and weaker risk appetite. It is essential for policymakers and investors to closely monitor market conditions and take appropriate measures to mitigate the impact of volatility on economic stability.

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Passage 2After the end of World War II, a pervasive, but unfortunately fallacious, economic perspective took hold. Based on the United States successful emergence from the Depression, the idea that war was good for an economy became fashionable. However, linking the United States economic recovery with its entry into World War II is a prime example offlawed economic thinking.Supporters of the war benefits economy theory hold that a country at war is a country with a booming economy. Industry must produce weapons, supplies, food, and clothing for the troops. The increased production necessitates the hiring of more people, reducing unemployment. More employment means more money in the pockets of citizens, who are then likely to go out and spend that money, helping the retail sector of the economy. Retail shops experience an increase in business and may need to hire more workers, further reducing unemployment and adding to the economic momentum. While this scenario sounds good in theory, it does not accurately represent what truly happens in a war time economy.In reality, the government can fund a war in a combination of three ways. It can raise taxes, cut spending on other areas, or increase the national debt. Each of these strategies has a negative impact on the economy. An increase in taxes takes money out of an individuals hands, leading to a reduction in consumer spending.Clearly, there is no net benefit to the economy in that case. Cutting spending in other areas has its costs as well, even if they are not as obvious.Any reduction in government spending means the imposition of a greater burden on the benefactors of that government spending. Cutbacks in a particular program mean that the people who normally depend on that program now must spend more of their money to make up for the government cuts. This also takes money out of consumers hands and leaves the economy depressed. Of course, a government could go into debt during the war, but such a strategy simply means that at some point in the future, taxes must be increased or spending decreased. Plus, the interest on the debt must be paid as well.Q. The passage implies which of the following about a government that funds a war by increasing the national debt?

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What key challenge is highlighted in the report concerning the global economy due to higher interest rates and weaker risk appetite?a)Increased consumer spendingb)Job creationc)Stock market volatilityd)Inflation controlCorrect answer is option 'C'. Can you explain this answer?

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