When Does a Change in Price Produce a Real-Income Effect

question 75

Multiple Choice

When does a change in price produce a real-income effect?

• A) only if purchasing power is impacted significantly
• B) only if purchasing power is impacted negatively
• C) only if there is a substitution effect
• D) only if there is an optimum effect
• E) always

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Definitions:

Fama and French Factors

Fama and French factors are three factors—market risk, size risk, and value risk—used in explaining portfolio returns beyond the market risk measured by beta.

Semistrong-form

A theory suggesting that stock prices incorporate all publicly available information, including historical data and public news.

Efficient Market Hypothesis

A theory stating that share prices reflect all available information, making it impossible to consistently achieve higher returns.

Technical Analysis

The study of past market data, primarily price and volume, to forecast future price movements without considering the underlying financial condition of the company.