If the Stock Market Crashes, What Would Be the Effect

question 91

Multiple Choice

If the stock market crashes, what would be the effect on aggregate demand and how could the Bank of Canada offset those effects?

• A) aggregate demand increases; by increasing the money supply
• B) aggregate demand increases; by decreasing the money supply
• C) aggregate demand decreases; by increasing the money supply
• D) aggregate demand decreases; by decreasing the money supply

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Definitions:

Opposite Emotions

Emotions that are diametrically different from each other, such as happiness and sadness, that can affect mental state and decision-making.

James-Lange Theory

A theory of emotion that proposes emotions occur as a result of physiological reactions to events, suggesting that physiological arousal precedes the emotional experience.

Bodily Responses

Physical reactions or changes in the body that occur in response to stimulus or emotional states, such as increased heart rate or sweating.

Cannon-Bard

A theory of emotion that proposes that emotions and bodily changes occur simultaneously, rather than one causing the other.