When the Demand for Good a Increases

question 172

Multiple Choice

When the demand for good A increases,

• A)the equilibrium price and equilibrium quantity will decrease.
• B)the equilibrium price will decrease, but the equilibrium quantity will increase.
• C)a surplus will result.
• D)the equilibrium price will rise, but the equilibrium quantity will decrease.
• E)the equilibrium price and equilibrium quantity will increase.

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Definitions:

M2

A money aggregate consisting of M1 plus savings deposits, small-denomination time deposits, money market mutual funds, and other miscellaneous near-monies.

Near-Monies

Assets that are easily convertible into cash but are not cash themselves, such as savings accounts and time deposits.

Time Deposits

Deposits that earn a fixed interest rate if held for the specified period, which can range from several months to several years; also called certificates of deposit.

Money Market Mutual Funds

Investment funds that invest in short-term debt securities, offering investors a high degree of liquidity and typically low risk.