All Else Being Equal, When People Become Less Optimistic About

question 60

Multiple Choice

All else being equal, when people become less optimistic about a company's future, then:

• A)the demand for the stock (and thus the price) rises
• B)the demand for the stock (and thus the price) falls
• C)the supply of the stock (and thus the price) rises
• D)the supply of the stock (and thus the price) falls

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Definitions:

Velocity of Circulation

The rate at which money is exchanged in an economy, reflecting the frequency with which money is spent on goods and services.

Rational Expectations Theory

The hypothesis that individuals form forecasts about the future based on all available information, including the understanding of economic policies, thus acting optimally on these expectations.

Aggregate Demand

The total demand for goods and services within a particular market or economy at a given price level and in a given time period.

Oil Price Shocks

Sudden and significant changes in the global price of oil, which can lead to economic instability and affect global markets.