If Stock Prices Go Up and People Feel Richer,aggregate Demand

question 27

Multiple Choice

If stock prices go up and people feel richer,aggregate demand will:

• A) increase.
• B) decrease.
• C) stay the same because there have been no changes to the underlying assets.
• D) be unpredictable.

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Definitions:

Marginal Cost

The cost added by producing one additional unit of a product or service, an important concept in economics for determining the optimal level of production.

Monopolist

A single firm or entity that is the exclusive provider of a good or service, thus controlling its market price.

Lerner Indices

Measures of a firm’s market power based on the difference between price and marginal cost, normalized by the product's price.

Marginal Cost

The increase or decrease in the total cost incurred by producing one more unit of a good or service.