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Suppose Households Unexpectedly Decrease Consumption

Question 24

Multiple Choice

Suppose households unexpectedly decrease consumption. Which of the following will occur as a result of this consumer pessimism?


A) No change in stock prices.
B) An increase in stock prices.
C) Stock prices decrease only if goods prices decrease.
D) A decrease in stock prices.
E) An ambiguous effect on stock prices.

Correct Answer:

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