-The Figure Above Shows Clara's Demand for CDs

question 75

Multiple Choice

-The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would

• A) decrease by $40.
• B) remain unchanged.
• C) decrease by $90.
• D) increase by $80.

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Definitions:

Inflation Rates

The rate at which the cost of general goods and services inflates, consequently eroding the power to buy.

Relative Purchasing Power Parity

An economic theory that states the rates of change in price levels between two countries should equal the rate of change in the exchange rate between their currencies.

Triangle Arbitrage

A practice of profiting from the price differential between three different currencies in the foreign exchange market.

Forward Trades

Non-standardized contracts between two parties to buy or sell an asset at a specified future date for a price agreed upon today.