A Rising Stock Market Index Due to Higher Share Prices

question 14

Multiple Choice

A rising stock market index due to higher share prices

• A) increases people's wealth and as a result may increase their willingness to spend.
• B) increases the amount of funds that business firms can raise by selling newly issued stock.
• C) decreases the amount of funds that business firms can raise by selling newly issued stock.
• D) both A and B of the above.

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Definitions:

Transfer Payments

Payments made by governments to individuals without the expectation of a direct service or goods in return, often part of a social safety net.

Recessionary Periods

Times of economic decline marked by falling GDP, reduced employment, and decreased spending and investment.

Aggregate Demand

The complete call for goods and services across an economy, set at a particular price level and over a definite timeframe.

John Maynard Keynes

British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.