When there is a stock market crash
A) consumption and investment rise.
B) consumption rises and investment falls.
C) consumption falls and investment rises.
D) consumption and investment fall.

Question

Quizplus · Accepted Answer

During a stock market crash, investors may lose confidence in the market and begin to sell their investments, leading to a decline in investment. This can also decrease confidence in the economy, leading consumers to reduce spending, causing a decline in consumption. Therefore, consumption and investment both fall during a stock market crash.

When There Is a Stock Market Crash