A permanent negative supply shock causes stock prices to ________ than they would if the supply shock were temporary.
A)fall more
B)fall less
C)rise more
D)rise less

Question

Quizplus · Accepted Answer

A permanent negative supply shock implies a long-term reduction in the supply of goods and services, leading to lower profits and revenue for companies. This would cause investors to expect lower future earnings and dividends, which in turn would lead to a bigger drop in stock prices compared to a temporary supply shock.

A Permanent Negative Supply Shock Causes Stock Prices to ________