Changes in the value of stocks may play a big role in the consumption decisions of individuals. How would changes in the stock market affect the consumption function?
Corporate stocks are an increasingly popular form of holding wealth in the United States. As stock prices rise, consumers who own stock see the value of their wealth increase and may feel more comfortable increasing their spending. Conversely, if stock prices fall, stockowners may feel poorer and decide to decrease their consumption spending. Therefore, increases in the prices of stocks should cause the consumption function to shift upward representing a higher level of spending even though current disposable income has not increased. A stock market decline would cause the consumption function to shift downward.
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From Figure 8-5, one can deduce
A. TR = TC at outputs 10 and 60. B. MR = MC at output 35. C. TFC = 100. D. All of the responses are correct.
If the reserve requirement is 20 percent and the Fed buys $10,000 worth of Treasury bonds, what is the change in the banks' total reserves?
A) $2,000 B) $20,000 C) $8,000 D) $100,000 E) $10,000
According to the 2007/2008 United Nations Human Development Report, the Gini ratio for Portugal is 38.5, Norway is 25.8, the United States is 40.8, and Russia is 39.9. Which of these four countries has the lowest level of income equality?
A) Portugal B) United States C) Norway D) Russia
Mercantilism was an economic policy that called for
a. the use of taxes and subsidies to control trade. b. leaving economic decisions to the free market. c. laissez faire. d. the elimination of private property.