The Initial Supply and Demand Curves for a Good Are

question 110

Multiple Choice

The initial supply and demand curves for a good are illustrated in the above figure. If there are technological advances in the production of the good, then the new equilibrium price for the good

• A) is less than $6.
• B) is $6.
• C) is more than $6.
• D) could be less than, equal to, or more than $6.

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Definitions:

Forward Interest Rate

An interest rate agreed upon now for a loan that will start at a future date, often indicative of market expectations for future interest rates.

Par Value

The nominal or face value of a stock or bond, which is the original value assigned when the security is issued.

Yield Curve

A graph showing the relationship between interest rates of bonds of equal credit quality but different maturities, often indicating economic expectations.

Short-Term Rates

The interest rates on debt securities that mature in the short term, often less than one year, which are a key indicator of the monetary policy stance of an economy.