The Short-Run Effect of a Sudden Increase in Stock Prices

question 49

Multiple Choice

The short-run effect of a sudden increase in stock prices will be

• A) an increase in output and a decrease in prices.
• B) an increase in both output and prices.
• C) a decrease in both output and prices.
• D) a decrease in output and an increase in prices.

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Definitions:

Demand Curve

A chart that depicts the link between a product's price and the amount of the product that buyers are prepared and capable of buying at various price points.

Monopolistically Competitive Industry

In a monopolistically competitive industry, numerous firms compete against each other with differentiated products, allowing for some degree of market power and price setting.

Downward Sloping

Describes a line or curve on a graph that shows a decrease in one variable as another variable increases, commonly seen in demand curves.

Depicts

Represents or shows something in a picture or story form, often used to describe how information is visually presented.