Assume That the Central Bank Implements Monetary Contraction That Is

Multiple Choice

Assume that the central bank implements monetary contraction that is not fully anticipated by financial markets. This partially unexpected monetary contraction will cause which of the following to occur?

A) An ambiguous effect on stock prices.
B) Stock prices to rise.
C) Stock prices to remain unchanged.
D) Stock prices fall initially followed by increases.
E) Stock prices to fall.