An unexpected drop in the growth rate of the CPI should send bond prices __________ and stock prices __________.
A) up; up
B) up; down
C) down; up
D) down; down

Question

Quizplus · Accepted Answer

An unexpected drop in the growth rate of the Consumer Price Index (CPI) typically leads to lower inflation expectations, which can cause bond prices to rise due to the inverse relationship between bond prices and yields. For stocks, lower inflation can signal lower future costs and potentially higher consumer spending, which can boost stock prices.

An Unexpected Drop in the Growth Rate of the CPI