Suppose there is a surge in stock market values. In the short run, we would expect the price level to________ and the unemployment rate to ________.
A) increase; decrease
B) increase; increase
C) decrease; increase
D) decrease; decrease
E) remain unchanged; decrease

Question

Quizplus · Accepted Answer

A surge in stock market values typically leads to increased consumer and business confidence, boosting spending and investment. This increased demand can drive up the price level and reduce unemployment in the short run.

Suppose There Is a Surge in Stock Market Values