Consider a Market That Is in Equilibrium

question 135

Multiple Choice

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

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

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Definitions:

Coupon Rate

Yearly interest payment on a bond, specified as a percentage of its listed value.

Bond Prices

Bond prices are the market value of bonds, which can fluctuate based on interest rate changes, credit risk, and other factors.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, which can influence economic activity by encouraging or discouraging spending and investment.

Coupon Bond

A bond that offers interest payments to its holder at fixed intervals until maturity, at which point the principal amount is repaid.