Suppose That the Demand and Supply Curves for a Good

question 85

Multiple Choice

Suppose that the demand and supply curves for a good are given by Q^D = 1,000/P and Q^S = 10P. What is happening in the market at a price of $2?

• A) There is an excess demand of 480 units.
• B) There is an excess demand of 150 units.
• C) There is an excess supply of 480 units.
• D) There is an excess supply of 150 units.

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Definitions:

Automatic Stabilizers

Economic policies and programs, such as unemployment insurance and taxation, that automatically help stabilize an economy by increasing or decreasing with the economic cycle.

Annually Budgeted

Annually budgeted refers to the process of allocating financial resources and planning expenditures for a year ahead.

Expansionary Gap

A situation where the actual economic output exceeds the potential output significantly, often leading to inflation.

Cyclically Balanced

A term that might not be widely recognized in standard economic literature; if intended to mean maintaining balance over economic cycles, it could refer to the aim of achieving economic stability across different phases of economic cycles.