Bursting Stock Market Bubbles Have Which of the Following Effects

question 144

Multiple Choice

Bursting stock market bubbles have which of the following effects?
I. decreased wealth
II. decreased production in those industries whose stocks have collapsed
III. unemployment in those industries whose stocks have collapsed

• A) I only
• B) I and II only
• C) II and III only
• D) I, II, and III

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Definitions:

Available-for-sale Securities

Financial assets not classified as held-to-maturity or trading securities, and can be sold in the market.

Significant Influence

The capacity to affect the operating and financial decisions of another entity, typically through ownership of a substantial share of its stock.

Voting Stock

Shares that give the shareholder voting rights in the corporation's matters, typically related to the election of the board of directors.

Unrealized Gain or Loss

The increase or decrease in the value of an investment that has not yet been sold and turned into cash.