What Is the Best Inference About the Impact of a Decrease

question 16

Multiple Choice

What is the best inference about the impact of a decrease in transportation costs?

• A) The demand and supply curves will shift out, which will increase quantities of goods.
• B) The supply curve will shift out, which will lead to lower prices to consumers.
• C) Farmers will earn a smaller share of the selling price of their crops.
• D) The demand curve will shift out, which will lead to higher prices and quantities of goods.

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Definitions:

Float Motive

The rationale for holding money in transaction accounts to satisfy daily operational cash flow needs.

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.

Long-term Maturities

Refers to debt securities or loans with repayment periods typically exceeding one year, often associated with bonds or long-term loans.

Money Market

is a segment of the financial market where short-term financial instruments and securities are traded, offering liquidity and lower risk.