Suppose That Demand for a Good Increases And, at the Same

question 54

Multiple Choice

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

• A)Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
• B)Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
• C)Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
• D)Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

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Definitions:

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, used to finance government spending.

Treasury Securities

Government-issued debt instruments that are used to finance the national debt, offering a secure investment with fixed interest payments.

Closing Stock Quote

The final price at which a stock is traded during a particular trading day or session on a securities exchange.

Real Rate

The interest rate adjusted for inflation, providing an idea of the true return on an investment.