Suppose Stock Prices Rise

question 49

Multiple Choice

Suppose stock prices rise.To offset the resulting change in output the Federal Reserve could

• A)increase the money supply.This increase would also move the price level closer to its value before the rise in stock prices.
• B)increase the money supply.However,this increase would move the price level farther from its value before the rise in stock prices.
• C)decrease the money supply.This decrease would also move the price level closer to its value before the rise in stock prices.
• D)decrease the money supply.However,this decrease would move the price level farther from its value before the rise in stock prices.