Assume That the Central Bank Implements Monetary Expansion That Is

Multiple Choice

Assume that the central bank implements monetary expansion that is fully anticipated by financial markets. This fully anticipated monetary expansion will cause which of the following to occur?

A) Stock prices to fall.
B) Stock prices to rise.
C) Stock prices to fall and the interest rate to rise.
D) Stock prices to remain unchanged.
E) An ambiguous effect on stock prices.