When Supply Decreases and Demand Does Not Change, the Equilibrium

question 133

Multiple Choice

When supply decreases and demand does not change, the equilibrium quantity ________ and the equilibrium price ________.

• A)increases; falls
• B)decreases; rises
• C)decreases; falls
• D)increases; rises

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Definitions:

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, often targeting higher incomes with higher tax rates.

Monetary Policy

The process by which a central bank or monetary authority manages the supply of money and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.

Federal Reserve Board

The governing body of the Federal Reserve System, the central bank of the United States, responsible for overseeing the country's monetary policy.

Fiscal Policy

Refers to the use of government spending and taxation policies to influence the economy.