The Tendency of Changes in Asset Prices to Affect Spending

question 2

Multiple Choice

The tendency of changes in asset prices to affect spending on consumption goods is called the ________ effect.

• A)income
• B)substitution
• C)wealth
• D)multiplier

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Definitions:

Curve

In economics, it usually refers to a graphical representation of the relationship between two factors, such as supply and demand, price and quantity, etc.

Line

A straight geometrical figure that extends infinitely in both directions without thickness.

Slope

In mathematics, it is the measure of the steepness or incline of a line, defined as the ratio of the vertical change to the horizontal change between two points on the line.

Positive Economics

A branch of economics that focuses on objective analysis and the description of how the economy functions, as opposed to normative economics that involves value judgments.