Which One of the Following Correctly Describes How Price Adjustment

question 108

Multiple Choice

Which one of the following correctly describes how price adjustment eliminates a shortage?

• A)As the price rises,the quantity demanded decreases and the quantity supplied increases.
• B)As the price rises,the quantity demanded increases and the quantity supplied decreases.
• C)As the price falls,the quantity demanded decreases and the quantity supplied increases.
• D)As the price falls,the quantity demanded increases and the quantity supplied decreases.
• E)As the price falls,the quantity demanded increases and the quantity supplied increases.

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Definitions:

Market Price

The market's current selling or purchasing rate for a service or asset.

Coupon Bond

A bond that pays the holder a fixed interest payment (coupon) every year until its maturity, at which point the principal is repaid.

Market Interest Rate

The prevailing rate of interest for securities and loans across the market, which can fluctuate based on supply and demand.

Interest Payment

The payment made to a lender by a borrower for the privilege of borrowing money, typically expressed as an annual rate.