Consider a Market That Is in Equilibrium

question 70

Multiple Choice

Consider a market that is in equilibrium.If it experiences both a decrease in demand and an increase in supply,what can be said of the new equilibrium?

• A)The equilibrium price and quantity will both rise.
• B)The equilibrium quantity will definitely fall,while the equilibrium price cannot be predicted.
• C)The equilibrium price will definitely fall,while the equilibrium quantity cannot be predicted.
• D)The equilibrium price and quantity will both fall.

---

Definitions:

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by regulatory authorities.

Total Checkable Deposits

represents the sum of all demand deposits and negotiable order of withdrawal (NOW) accounts in the banking system, which are available for immediate withdrawal and payment.

Depository Institutions Deregulation and Monetary Control Act

A United States federal law enacted in 1980 aimed at improving the efficiency of the financial institutions system and enhancing the control of the money supply.

Reserve Requirements

Regulations set by central banks requiring commercial banks to hold a certain percentage of their deposits in reserve as cash in their vaults or as deposits with the central bank.