How can stock prices affect spending by businesses and households?
What will be an ideal response?
Rising stock prices make it easier for corporations to raise funds. Since stocks make up a significant portion of household wealth, changes in stock prices can affect wealth and thus household spending. Changes in stock prices can also affect consumer and business expectations. For example, declining stock prices may make households more uncertain about their jobs and income, leading to less spending.
You might also like to view...
Refer to Table 2-11. South Korea has a comparative advantage in the production of
A) digital cameras. B) wheat. C) both products. D) neither product.
The lowest point on a perfectly competitive firm's short-run supply curve corresponds to the minimum point on its
A. AFC curve. B. MC curve. C. AVC curve. D. ATC curve.