Volatile Asset Prices Affect the Real Sector Through Which of the Following

question 34

Multiple Choice

Volatile asset prices affect the real sector through which of the following channels?

• A)when asset prices increase, nominal wealth increases leading to spending increases
• B)when wealth increases, spending increases and the willingness to take on more debt
• C)when the health of financial institutions is jeopardized by decreases in the prices of assets they hold
• D)All of the above are correct.

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Definitions:

Blacksmiths

Artisans who work with metal, particularly iron, using tools to forge and shape it into products such as tools, weapons, and structures.

AFL

The American Federation of Labor, a national federation of labor unions in the United States, founded in 1886 and focused on skilled workers.

Knights of Labor

A significant labor organization in the United States during the 19th century that sought to organize workers across different industries to improve working conditions.

Unions

Organizations formed by workers to protect their rights, negotiate collective contracts, and provide support to members on employment matters.