A Decrease in Stock Prices Will _____ the Net Wealth

question 3

Multiple Choice

A decrease in stock prices will _____ the net wealth of households and _____ consumption.

• A)reduce;increase
• B)reduce;decrease
• C)reduce;not change
• D)increase;increase
• E)increase;decrease

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Definitions:

Price Ceiling

A government-imposed limit on the price charged for a product, intended to prevent the price from rising to a certain level.

Maximum Price

A price ceiling set by a government or regulatory body, above which a particular good or service cannot be sold.

Government

The governing body of a nation, state, or community which is responsible for making and enforcing laws and managing public resources and affairs.

Rationing Mechanism

a system or policy by which scarce goods or services are distributed.