The late 1990s, the U.S. stock market boomed, causing U.S. consumption to rise. Economists refer to this outcome as the:
A. Keynes effect.
B. interest-rate effect.
C. wealth effect.
D. multiplier effect.
C. wealth effect.
You might also like to view...
Use the figure below to answer the following question.
An increase in price, all else held constant, would cause a change from
A. point 4 to point 5. B. point 1 to point 3. C. point 3 to point 4. D. point 5 to point 1.
When the price of a burrito increases from $2 to $4, the quantity demanded decreases from 50 to 40. Using the midpoint method, the price elasticity of demand equals
A) 1/3. B) 3. C) 2. D) 1. E) 1/2.
Assume the prices of labor and capital remain the same, but the average educational level of workers decreases and therefore labor productivity decreases. This would lead a firm to
A. use a more labor-intensive technology. B. use a more capital-intensive production technology. C. not change its production technology, but produce fewer units of output. D. use only capital to produce the product.
Changes in the legal reserve requirement
a. are often implemented by the Fed to avoid disruption to both bank and borrowers b. affect total bank reserves c. are actively pursued by the member banks of the Fed d. are used to limit the lending activity of banks e. help to create the certainty that banks prefer to avoid