Suppose households unexpectedly increase consumption.Which of the following will occur as a result of this unexpected increase in consumption?
A)an increase in stock prices
B)a reduction in stock prices
C)no change in stock prices
D)an ambiguous effect on stock prices

Question

Quizplus · Accepted Answer

An unexpected increase in consumption can have various effects on stock prices depending on factors such as the reason for the increase in consumption, the sectors benefiting from it, and the overall economic context. Therefore, the effect on stock prices is ambiguous.

Suppose Households Unexpectedly Increase Consumption