A Drought in California Destroys Many Red Grapes

question 29

Multiple Choice

A drought in California destroys many red grapes.As a result of the drought,the consumer surplus in the market for red grapes

• A)increases,and the consumer surplus in the market for red wine increases.
• B)increases,and the consumer surplus in the market for red wine decreases.
• C)decreases,and the consumer surplus in the market for red wine increases.
• D)decreases,and the consumer surplus in the market for red wine decreases.

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Definitions:

Nominal GDP

The gross domestic product measured in current prices, without adjusting for inflation, reflecting the value of all goods and services produced.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including currency, demand deposits, and other liquid instruments.

Velocity of Money

The rate at which money circulates or is exchanged in an economy, used to indicate the economic activity level.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, serving as an indicator of inflation.