Which of the Following Would Be Most Likely to Cause

question 364

Multiple Choice

Which of the following would be most likely to cause the price/earnings ratio of stocks to rise?

• A) the expectation of a recession in the near future
• B) the expectation of inflation in the near future
• C) higher interest rates
• D) lower interest rates

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Definitions:

Elastic

Describes a situation in which the demand for a product or service significantly changes in response to a change in its price.

Deadweight Loss

A loss of economic efficiency that can occur when the free market equilibrium for a good or a service is not achieved.

Excise Tax

A tax imposed on specific goods, services, or transactions, often included in the price of products like tobacco, alcohol, and fuel.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that producers are willing and able to sell.