Suppose households unexpectedly increase consumption and


Suppose households unexpectedly increase consumption and the central bank keeps the interest rate fixed. Which of the following will occur as a result of this consumer optimism?

A. an ambiguous effect on stock prices

B. no change in stock prices

C. stocks prices increase only if goods prices increase

D. a decrease in stock prices

E. an increase in stock prices

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Microeconomics: Suppose households unexpectedly increase consumption and
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