You Bought Some Shares of Stock And, Over the Next

question 345

Multiple Choice

You bought some shares of stock and, over the next year, the price per share increased by 5 percent and the price level increased by 8 percent. Before taxes, you experienced

• A)both a nominal gain and a real gain, and you paid taxes on the nominal gain.
• B)both a nominal gain and a real gain, and you paid taxes only on the real gain.
• C)a nominal gain and a real loss, and you paid taxes on the nominal gain.
• D)a nominal gain and a real loss, and you paid no taxes on the transaction.

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Definitions:

Price Elasticity

The impact of price adjustments on the quantity of a good demanded measured.

Total Expenditures

The total amount of money spent by individuals or firms on goods and services within a specific period.

Price Elasticity

A measure in economics that shows how the quantity demanded of a good or service responds to a change in its price.

Total Expenditures

The sum of all spending by consumers, businesses, and the government in an economy.