As the LM Curve Becomes Steeper,an Unexpected Decrease in Consumer

question 51

Multiple Choice

As the LM curve becomes steeper,an unexpected decrease in consumer confidence

• A)will cause a relatively large increase in output and relatively large increase in the interest rate.
• B)will cause a relatively small increase in output and relatively small increase in the interest rate.
• C)is more likely to cause stock prices to rise.
• D)is more likely to cause stock prices to fall.

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Definitions:

Revealed Preferred

A concept in consumer choice theory that preferences can be determined by observing consumer choices under different constraints.

Violates WARP

Refers to a situation where an individual's choice behavior contradicts the Weak Axiom of Revealed Preferences, suggesting inconsistency in their preferences.

Bundle

A combination of goods or services that are sold or consumed together.

Revealed Preferred

Another term for revealed preference, emphasizing the process of deducing preferences by observing actual choices under constraints.