Assume That the RBA Is Expected to Respond to Any

Multiple Choice

Assume that the RBA is expected to respond to any event by keeping the interest rate constant (i.e., equal to its initial level) . An unexpected tax cut will cause:

A) stock prices to fall.
B) stock prices to rise.
C) no change in stock prices.
D) an ambiguous effect on stock prices.
E) stock prices to rise only if goods prices rise.