Suppose Households Unexpectedly Increase Consumption

question 53

Multiple Choice

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

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

---

Definitions:

Merit Pay System

A compensation strategy where employees receive pay increases based on their performance evaluations.

Gainsharing

A performance-based compensation program where the savings or gains from increased productivity are shared with employees.

Standard Error

A measure of the precision of a sample's mean estimate of a population mean.