If Both the Demand for a Product and the Supply

question 213

Multiple Choice

If both the demand for a product and the supply of it decrease, then the equilibrium quantity will ________ and the equilibrium price will ________.

• A) increase; either increase, decrease, or remain constant
• B) decrease; either increase, decrease, or remain constant
• C) increase; increase
• D) increase; decrease

Understand how behavioral economics explains suboptimal decisions and systematic errors.

Grasp the strategies businesses use to influence consumer behavior and increase sales.

Recognize the contributions of key figures in the field of behavioral economics.

Contrast the prediction capabilities of neoclassical and behavioral economics in real-world economic crises.

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Definitions:

Real Rate

The interest rate or rate of return on an investment after adjusting for inflation, representing the actual purchasing power of earnings.

Inflation Rate

This measures the percentage increase in the price level of goods and services in an economy over a period of time.

Risk-Free Rate

The return on an investment with no risk of financial loss, typically associated with government bonds.

Expected Inflation

The anticipated rate at which prices of goods and services will rise over a period.