The Law of Demand States That _____

question 115

Multiple Choice

The law of demand states that _____

• A) price and quantity demanded are positively related, other things constant.
• B) price is the only factor that influences the quantity that people are willing and able to buy.
• C) quantity demanded varies inversely with price, other things constant.
• D) the demand curve shifts whenever the price of a good changes, other things constant.
• E) firms create a demand for a product by producing it.

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Definitions:

Fiscal Policy

Economic strategies involving tax and expenditure decisions by the government to affect the national economy.

Deflationary Gap

A situation in which the total spending in an economy is lower than the necessary amount to achieve full employment or potential output.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country over a specified period.

MPC

The marginal propensity to consume, which measures the portion of additional income that an individual spends on consumption instead of saving.