In the late 1990s, the U.S. stock market boomed, causing U.S. consumption to rise. Economists refer to this outcome as the
A) Keynes effect.
B) interest-rate effect.
C) wealth effect.
D) multiplier effect.

Question

Quizplus · Accepted Answer

This outcome is referred to as the wealth effect, as the increase in the stock market led to an increase in the wealth of consumers, which in turn led to an increase in consumption. The other options are not directly related to this scenario.

In the Late 1990s, the U