Which of the following can be a reaction of investors during economic uncertainty?

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Prepare for UCF's ECO3223 Exam with tailored quizzes, practice flashcards, and multiple-choice questions. Boost your understanding of Money and Banking with detailed explanations.

Purchasing gold as a safe haven is a well-documented reaction of investors during times of economic uncertainty. Gold is traditionally viewed as a secure asset that retains value and is less likely to be affected by market volatility compared to stocks or other financial assets. When economic conditions are unstable—such as during recessions or significant geopolitical events—investors often turn to gold as a hedge against risk and inflation. This demand for gold can be driven by a desire to protect wealth, as it tends to perform well when confidence in traditional financial markets wanes.

In contrast to this behavior, options such as flocking to stocks or selling off bonds typically indicate more risk-seeking behavior or confidence in the market, which is generally not characteristic of investor reactions during uncertain times. Ignoring market trends may suggest a lack of engagement with economic signals, which is less common among investors who actively seek to safeguard their investments in a downturn.