Ceteris Paribus, an Increase in the Supply of a Good

question 94

Multiple Choice

Ceteris paribus, an increase in the supply of a good causes which of the following?

• A) Lowers the equilibrium price, and reduces the quantity bought and sold.
• B) Raises the equilibrium price, and raises the quantity bought and sold.
• C) Raises the equilibrium price, and increases the quantity bought and sold.
• D) Lowers the equilibrium price, and increases the quantity bought and sold.
• E) Equilibrium price and equilibrium quantity change are indeterminate.

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Definitions:

Policy Makers

Individuals or bodies responsible for formulating and implementing public policies, laws, and regulations, often within governmental or legislative institutions.

Aggregate Supply

The total supply of goods and services that are available to consumers in an economy at a given price level in a given period.

Passive Approach

A passive approach involves a non-interventionist or minimal-effort strategy of dealing with situations, often contrasted with active strategies that require direct action.

Discretionary Fiscal Policy

Discretionary Fiscal Policy involves government action to stimulate or restrain the economy via changes in taxation and spending, based on current economic conditions.