What Does a General, Persistent Decline in Stock Prices Signal

question 12

Multiple Choice

What does a general, persistent decline in stock prices signal about an economy?

• A)that the economy is about to enter a boom period because people will be able to buy stock for less money
• B)that the economy is about to enter a recession because low stock prices may mean that people are expecting low corporate profits
• C)nothing about the business cycle because stock prices can fall for many reasons
• D)that the economy is about to enter a recession because low stock prices mean that corporations have had low profits in the past

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Definitions:

Milgram's Study

A series of social psychology experiments conducted by Stanley Milgram, which explored obedience to authority figures by having participants administer what they believed were electric shocks to another person.

Crowd Formation

The process by which individuals come together to form a large group, often in response to an event, interest, or common goal.

Deindividuation

A psychological state where an individual loses self-awareness and personal accountability in groups, often leading to uncharacteristic behavior.

Zimbardo

Refers to Philip Zimbardo, a psychologist known for conducting the Stanford Prison Experiment, which explored the effects of perceived power and authority on behavior.