If Both the Demand for and the Supply of College

question 25

Multiple Choice

If both the demand for and the supply of college graduates shift to the left,then the equilibrium wage would ________ and the number of college graduates would ________.

• A) increase; change ambiguously
• B) change ambiguously; increase
• C) decrease; change ambiguously
• D) change ambiguously; decrease

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Definitions:

Stabilization Policies

Economic strategies and actions taken by governments or monetary authorities to stabilize the economy, aiming to reduce fluctuations in the business cycle.

Milton Friedman

An American economist and Nobel Prize laureate known for his research in consumption analysis, monetary history and theory, and his advocacy of free-market capitalism.

Rational Expectations

The hypothesis that individuals form forecasts about the future based on all available information in an unbiased and consistent manner.

Self-Correction Mechanism

The market's ability to adjust back to equilibrium without intervention, often used in the context of economic cycles.