1 A rising stock market index due to higher share prices
A) increases people”s wealth, but is unlikely to increase their willingness to spend.
B) increases people”s wealth and as a result may increase their willingness to spend.
C) decreases the amount of funds that business firms can raise by selling newly issued stock.
D) decreases people”s wealth, but is unlikely to increase their willingness to spend.
2 When stock prices fall
A) an individual”s wealth is not affected nor is their willingness to spend.
B) a business firm will be more likely to sell stock to finance investment spending.
C) an individual”s wealth may decrease but their willingness to spend is not affected.
D) an individual”s wealth may decrease and their willingness to spend may decrease.
3 Changes in stock prices
A) do not affect people”s wealth and their willingness to spend.
B) affect firms” decisions to sell stock to finance investment spending.
C) occur in regular patterns.
D) are unimportant to decision makers.