If the Price of "X" Increases and You Buy Less

question 54

Multiple Choice

If the price of "X" increases and you buy less "Y," then

• A)"X" and "Y" are complements,and the price of "Y" will increase.
• B)"X" and "Y" are complements,and the price of "Y" will decrease.
• C)"X" and "Y" are substitutes,and the price of "Y" will increase.
• D)"X" and "Y" are substitutes, and the price of "Y" will decrease.

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Definitions:

Forward Interest Rate

An interest rate agreed upon now for a loan that will start at a future date, often indicative of market expectations for future interest rates.

Par Value

The nominal or face value of a stock or bond, which is the original value assigned when the security is issued.

Yield Curve

A graph showing the relationship between interest rates of bonds of equal credit quality but different maturities, often indicating economic expectations.

Short-Term Rates

The interest rates on debt securities that mature in the short term, often less than one year, which are a key indicator of the monetary policy stance of an economy.