If Supply and Demand Intersect at a Price of $5

question 17

Multiple Choice

If supply and demand intersect at a price of $5.00, then a reduction in price from $6.00 to $5.00 will cause an increase in quantity:

• A) supplied, a decrease in quantity demanded, and the alleviation of a shortage.
• B) demanded, a decrease in quantity supplied, and the alleviation of a shortage.
• C) supplied, a decrease in quantity demanded, and the alleviation of a surplus.
• D) demanded, a decrease in quantity supplied, and the alleviation of a surplus.

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Definitions:

Long-Term Bonds

Debt securities with an original maturity of more than a decade, offering the potential for higher yields in return for longer exposure to interest rate risk.

Short-Term Bonds

Bonds with maturities typically less than five years, offering lower risk and lower return potential compared to longer-term bonds.

Coupon Rate

The interest rate paid yearly on a bond, expressed as a percentage of its face value.

Market Value

The rate at which a service or asset is presently traded in the market.