Suppose Households Unexpectedly Decrease Consumption

question 29

Multiple Choice

Suppose households unexpectedly decrease consumption.Which of the following will occur as a result of this unexpected reduction in consumption?

• A)an increase in stock prices
• B)a reduction in stock prices
• C)no change in stock prices
• D)an ambiguous effect on stock prices

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Definitions:

Double-Declining-Balance

An accelerated method of depreciation calculating depreciation at twice the rate of the straight-line depreciation method.

Salvage Value

The assessed worth of an asset at the expiration of its life of usefulness.

Depreciation Expense

The organized spreading of a tangible asset's expense over the duration of its utility.

Useful Life

The estimated duration a fixed asset is expected to be economically usable, with normal repairs and maintenance.