Suppose Policy Makers Implement a Fiscal Expansion That Is Not

Multiple Choice

Suppose policy makers implement a fiscal expansion that is not fully anticipated by financial market participants.We know that this will

A) always cause stock prices to fall.
B) always cause stock prices to rise.
C) tend to cause stock prices to rise if the LM curve is very flat.
D) tend to cause stock prices to rise if the LM curve is vertical.