Which of the following actions might we logically expect to result from rising stock prices?
A)Jim decreases his consumption spending.
B)Firms sell fewer shares of new stock.
C)Firms spend more on investment.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Rising stock prices are an indication of improving economic conditions and increasing investor confidence. This typically leads to increased business investment by firms, in order to capitalize on these favorable conditions and expand operations. Therefore, option C is the most likely result. Options A and B are less probable as rising stock prices do not necessarily have an immediate impact on individual consumption behavior or the issuance of new stocks by firms.

Which of the Following Actions Might We Logically Expect to Result