Standard life-cycle analysis predicts that a stock market crash that suddenly reduces the sale value of stocks ________ consumption expenditures.
A)reduces
B)increases
C)has no effect on
D)All of the above are possible with a market crash.

Question

Quizplus · Accepted Answer

A stock market crash that reduces the sale value of stocks leads to a decline in household wealth and a decrease in consumer confidence, which can in turn reduce consumption expenditures. Therefore, option A is correct, while options B and C are not likely. Option D is too broad and not specific to the scenario in question.

Standard Life-Cycle Analysis Predicts That a Stock Market Crash That