Stock Prices May Rise from a Reduction in Interest Rates

question 44

Multiple Choice

Stock prices may rise from a reduction in interest rates because:

• A) consumer and business confidence about future growth improves.
• B) stockholders will expect lower future earnings.
• C) financial market participants are less optimistic about future earnings.
• D) the present value of future earnings will decrease.

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Definitions:

Antipollution Policy

Strategies and regulations implemented by governments or organizations to reduce and control the emission of pollutants.

External Costs

Costs of an economic activity that are not borne by the parties involved in the transaction but are instead imposed on third parties or the society at large.

Peak Driving

Peak driving refers to periods of high demand for gasoline, often coinciding with certain times of the year like summer holidays, resulting in higher gasoline prices due to increased consumption.