]If Consumers Become More Optimistic,which of the Following Is the Most

question 171

Multiple Choice

]If consumers become more optimistic,which of the following is the most likely in the short run?

• A) A decrease in output,a decrease in money demand,and a decrease in the interest rate.
• B) An increase in output,an increase in money demand,and an increase in the interest rate.
• C) An increase in output,an increase in money demand,and a decrease in the interest rate.
• D) A decrease in output,an increase in money demand,and a decrease in the interest rate.
• E) An increase in output,a decrease in money demand,and a decrease in the interest rate.

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Definitions:

Liquidity

The ease with which an asset can be quickly bought or sold in the market without affecting its price.

Small-Firm Effect

The observed phenomenon that, on average, smaller firms have historically provided higher risk-adjusted returns than larger firms.

Book-To-Market Effect

The tendency for securities with high book-to-market ratios to outperform those with low ratios.

Semistrong Form

A theory in the Efficient Market Hypothesis that postulates all publicly available information is already reflected in stock prices, including historical data and new public information.