A decrease in stock prices will _____ the net wealth of households and _____ consumption.
A)reduce;increase
B)reduce;decrease
C)reduce;not change
D)increase;increase
E)increase;decrease

Question

Quizplus · Accepted Answer

A decrease in stock prices will reduce the net wealth of households as their investments in stocks will lose value. This, in turn, will lead to a decrease in consumption as households may become more cautious and cut back on their spending.

A Decrease in Stock Prices Will _____ the Net Wealth