According to the Household Liquidity Effect,higher Stock Prices Lead to Increased

question 36

Multiple Choice

According to the household liquidity effect,higher stock prices lead to increased consumption expenditures because consumers

• A)feel more secure about their financial position.
• B)want to sell stocks and spend the proceeds before stock prices fall.
• C)believe that their wages will increase due to increased profitability of firms.
• D)can now afford more expensive imports.

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