In the Following Graph, Q_S1 and Q_S2 Represent the Supply

question 36

Multiple Choice

In the following graph, Q_S1 and Q_S2 represent the supply curves and Q_D1 and Q_D2 represent the demand curves. Refer to the graph to answer the question:
Which of the following statements is true?

• A) The supply curve Q_S1 is elastic and Q_S2 is inelastic.
• B) As price increases along the supply curve Q_S1, output will increase more than
• C) An increase in demand will lead to a relatively larger change in output along Q_S2.
• D) A decrease in demand from Q_D2 to Q_D1 leads to a rise in the equilibrium price.

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Definitions:

Disinflation

A drop in the pace of inflation, showing that the rate at which prices of goods and services climb is slowing down.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the economy.

Misery Index

An economic indicator created by adding the unemployment rate to the inflation rate, proposing to reflect the average citizen's financial discomfort.

Nominal Interest Rate

The rate of interest before adjusting for inflation, representing the face value of interest payments.