Which of the Following Statements Is Correct

question 22

Multiple Choice

Which of the following statements is correct?

• A)If supply decreases and demand increases, equilibrium price will rise.
• B)If supply decreases and demand decreases, equilibrium quantity will rise.
• C)If supply decreases and demand decreases, equilibrium price will fall.
• D)If supply decreases and demand increases, equilibrium quantity will rise.
• E)If supply decreases and demand remains constant, equilibrium price is indeterminate.

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Definitions:

Wages Are Sticky

The theory that salaries do not adjust quickly to changes in market conditions, leading to unemployment or surpluses.

Short-Run Aggregate Supply Curve

A graphical representation showing the relationship between the total production of goods and services and the price level for output in the short run.

Actual Price Level

The current general price of goods and services in the economy.

Expected Price Level

This refers to the anticipation or forecast of future prices of goods and services in the economy, often influencing consumer and business decisions.