How Does a Stock Market Boom Affect Household Spending, and How

question 69

Multiple Choice

How does a stock market boom affect household spending, and how would the Bank of Canada offset the effects on the price level and real GDP?

• A) household spending increases; the Bank of Canada would increase the money supply
• B) household spending increases; the Bank of Canada would decrease the money supply
• C) household spending decreases; the Bank of Canada would increase the money supply
• D) household spending decreases; the Bank of Canada would decrease the money supply

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Definitions:

Stock Options

A benefit in the form of an option given by the company to an employee to buy stock in the company at a discount or at a stated fixed price.

Executive Perquisites

Additional benefits or privileges offered to executives or senior managers beyond their basic salary, which may include company cars, stock options, or country club memberships.

Stock Options

Stock options are financial instruments that give employees the right, but not the obligation, to buy company shares at a predetermined price within a specific time period, often used as part of employee compensation packages.

Compensation Package

The total combination of benefits and salary offered to an employee, which may include bonuses, health insurance, and retirement plans.