Historically, P/E ratios have tended to be

A) higher when inflation has been high.
B) lower when inflation has been high.
C) uncorrelated with inflation rates but correlated with other macroeconomic variables.
D) uncorrelated with any macroeconomic variables, including inflation rates.

P/E Ratios

The price-to-earnings ratio, a valuation metric for stocks calculated by dividing the current market price of a stock by its earnings per share.

Macroeconomic Variables

Economic indicators that represent the overall health and performance of an economy, such as GDP, inflation rates, and unemployment rates.

Inflation

The rate at which prices for commodities and services overall ascend, depleting the power of purchase.