The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1

-If the current shareholders begin to believe that the prices of the stocks are likely to rise in the future, the supply curve of shares will:

Question

The figure given below shows the demand curves [D 1 and D 2 ] and the supply curve [S 1 ] of capital.Figure 17.1
 
-If the current shareholders begin to believe that the prices of the stocks are likely to rise in the future, the supply curve of shares will:

Quizplus · Accepted Answer

If the current shareholders believe that prices of the stocks are likely to rise in the future, they may decide to hold on to their shares in the hope of earning greater profits in the future. This will lead to a decrease in the supply of stocks at the current price level, causing a leftward shift in the supply curve. Therefore, the correct answer is D, shift to the left.

The Figure Given Below Shows the Demand Curves [D1 and D2]

The Figure Given Below Shows the Demand Curves [D₁ and D₂]