Exploring Economics
Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
Question
Chapter 21, Problem 1P
To determine

To explain:

The reasons for firms do not want to issue new shares of stock when consumers or businesses are negative about the economic conditions.

Expert Solution & Answer
Check Mark

Explanation of Solution

The share prices are likely to fall when consumers or businesses are pessimistic about economic conditions. So,if there is a situation where consumers or businessmen are pessimistic, the firms should issue a larger number of stocks to raise some funds. Likewise, these firms are apt to spend in new capital or new expenditure when economic conditions are not in support of them.

Economics Concept Introduction

Stock:

The ownership on a company's assets and earnings in form of share is known as stock. The person having share can claim ownership for that part.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Recommended textbooks for you
  • Exploring Economics
    Economics
    ISBN:9781544336329
    Author:Robert L. Sexton
    Publisher:SAGE Publications, Inc
    Essentials of Economics (MindTap Course List)
    Economics
    ISBN:9781337091992
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Brief Principles of Macroeconomics (MindTap Cours...
    Economics
    ISBN:9781337091985
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
  • Principles of Macroeconomics (MindTap Course List)
    Economics
    ISBN:9781305971509
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Economics, 7th Edition (MindTap Cou...
    Economics
    ISBN:9781285165875
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Macroeconomics (MindTap Course List)
    Economics
    ISBN:9781285165912
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
  • Exploring Economics
    Economics
    ISBN:9781544336329
    Author:Robert L. Sexton
    Publisher:SAGE Publications, Inc
    Essentials of Economics (MindTap Course List)
    Economics
    ISBN:9781337091992
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Brief Principles of Macroeconomics (MindTap Cours...
    Economics
    ISBN:9781337091985
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Macroeconomics (MindTap Course List)
    Economics
    ISBN:9781305971509
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Economics, 7th Edition (MindTap Cou...
    Economics
    ISBN:9781285165875
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning
    Principles of Macroeconomics (MindTap Course List)
    Economics
    ISBN:9781285165912
    Author:N. Gregory Mankiw
    Publisher:Cengage Learning