A decline in the stock market, which makes consumers poorer, would cause
A) the aggregate demand curve to shift to the right.
B) the aggregate demand curve to shift to the left.
C) a movement down and to the right along the aggregate demand curve.
D) a movement up and to the left along the aggregate demand curve.
B
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The potential for a decline in product quality due to asymmetric information is commonly referred to as
A) the lemons problem. B) planned obsolescence. C) diminishing marginal product. D) the externality problem.
To test the theory that if the price of pens rises, then pen purchases fall, an economist would
A. analyze data on the price of pens and the price of pencils without holding other factors constant. B. investigate whether people purchase more pens when their income rises. C. analyze data on pen purchases linked to the price of pens, holding other factors constant. D. ask his or her friends if they would buy fewer pens when the price rises.