The Figure Given Below Shows the Demand Curves [D₁ and

question 6

Multiple Choice

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital. Figure 16.1
- In Figure 16.1,if the price set in the market is P₃ when the demand curve is D₁,then:

• A)the market will be in equilibrium.
• B)there will be an excess demand for capital of the amount Q₄ - Q₁.
• C)there will be a shortage of capital in the market by the amount Q₄ - Q₂.
• D)there will be a surplus of capital in the market by the amount Q₃ - Q₁.
• E)there will be a surplus of capital in the market by the amount Q₃ - Q₂.

---

Definitions:

Exchange Rates

The rate at which one currency can be exchanged for another, influenced by market conditions, economic factors, and government policies.

Fluctuations

Variations or changes in value or level, often seen in financial markets, exchange rates, or pricing of commodities.

Income Recognition

The accounting principle that determines the specific conditions under which income becomes recognized as revenue on the financial statements.

Put Option

A financial derivative that gives the holder the right but not the obligation to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.