A Sudden Decrease in Consumers' Wealth-Resulting, for Example, from a Stock

question 198

Multiple Choice

A sudden decrease in consumers' wealth-resulting, for example, from a stock market crash-would initially cause a(n)

• A)downward movement along the consumption function.
• B)downward shift of the consumption function.
• C)upward movement along the consumption function.
• D)upward shift of the consumption function.

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Definitions:

Competitive Forces

Elements in the external environment that influence an organization's competitive position, including competition, customer power, supplier power, the threat of new entrants, and the threat of substitute products or services.

Porter

Michael Porter, a renowned economist known for his theories on economics, business strategy, and competitive advantage.

Industry

The sector of an economy that is concerned with production and manufacturing of goods, or provision of services.

Entry Barriers

Obstacles that prevent new competitors from easily entering an industry or area of business.