"Bad news" about an expenditure-related indicator drives bond prices __________ and stock prices __________.
A) up; up
B) up; down
C) down; up
D) down; down

Question

Quizplus · Accepted Answer

When bad news about an expenditure-related indicator is released, it usually suggests that consumer spending may decrease in the future, which is seen as negative for the economy as a whole. This can drive bond prices down (as investors demand higher yields to compensate for the increased risk) and stock prices up (as investors may seek safer investments in stocks with stable dividends). Therefore, the correct answer is C, with bond prices going down and stock prices going up.

"Bad News" About an Expenditure-Related Indicator Drives Bond Prices __________