Short-term or long-term fluctuations in stock prices

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Question: The following two graphs show the ratio of consumption/income and stock prices/income, and the four-quarter percentage changes in consumption and

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stock prices. Based on these graphs, do you think that short-term or long-term fluctuations in stock prices are the more important determinant of consumption? Why do you think the correlation in percentage changes is stronger before 1980, while the correlation with the ratios is stronger after 1980?

Reference no: EM131737654

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