An Increase in an Indicator of Inflation Such as the Consumer

question 6

Multiple Choice

An increase in an indicator of inflation such as the consumer price index may create expectations of ________ interest rates and place _______ pressure on the prices of money market securities.

• A)lower; downward
• B)lower; upward
• C)higher; downward
• D)higher; upward

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a particular period.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage.

Electricity Consumption

The amount of electrical energy used by households, businesses, and industries over a certain period, typically measured in kilowatt-hours (kWh).

Price Elasticity

A gauge of the extent to which the demand for a certain item is affected by fluctuations in its cost.