Suppose Households Unexpectedly Decrease Consumption

question 24

Multiple Choice

Suppose households unexpectedly decrease consumption. Which of the following will occur as a result of this consumer pessimism?

• A) No change in stock prices.
• B) An increase in stock prices.
• C) Stock prices decrease only if goods prices decrease.
• D) A decrease in stock prices.
• E) An ambiguous effect on stock prices.

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Definitions:

Business Contacts

Refers to the network of individuals and organizations with which a company maintains professional relationships to support its operations and growth.

For Cause

A legal term used to describe the firing or termination of an employee based on their actions, which justify such a dismissal under company policy or law.

Majority Vote

A decision rule in which more than half of the votes cast determine the outcome of an election or decision.

Discretion

The power or right to make decisions based on one's own judgment rather than following a strict rule or protocol.