When Interest Rates and Uncertainty Decline, P/E Ratios Will [Blank]

question 75

Multiple Choice

When interest rates and uncertainty decline, P/E ratios will [blank].

• A)rise
• B)stabilise
• C)decline
• D)fluctuate

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Definitions:

ATC Curves

The graphical representation of the relationship between average total costs and output levels in the short run for a firm.

Diseconomies of Scale

Diseconomies of scale occur when a business expands to the point where the costs of managing and coordinating operations increase, leading to a rise in the average costs.

Economies of Scale

Cost advantages reaped by companies as a result of scale of operation, leading to a reduction in the per-unit cost of production.

Long-Run Average Cost Curve

A graphical representation that shows the lowest cost at which a firm can produce any given level of output in the long run, when all inputs are variable.