When the Housing Bubble Popped in 2007, Combined Demand and Supply

question 156

Multiple Choice

When the housing bubble popped in 2007, combined demand and supply side shocks:

• A) decreased output.
• B) increased investment.
• C) decreased unemployment.
• D) increased interest rates.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company’s profits via dividends.

Authorized Shares

The maximum number of shares that a corporation is legally allowed to issue, as specified in its articles of incorporation.

Reacquired Shares

Shares that a company buys back from its shareholders, reducing the amount of outstanding stock on the market.

Par Common Stock

The nominal or face value assigned to common shares in the articles of incorporation, often having little relation to the market value.