An Increase in the Demand for a Commodity Accompanied by a Decrease

question 43

Multiple Choice

An increase in the demand for a commodity accompanied by a decrease in its supply will result in a(n) :

• A)decrease in price and an increase in quantity.
• B)increase in both price and quantity.
• C)increase in quantity while the price can increase or decrease.
• D)decrease in price while the quantity can increase or decrease.

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Definitions:

Interest Rate

The interest rate a borrower incurs for using money loaned from a lender.

Real Balances

Real balances refer to the purchasing power of money holdings, adjusted for changes in the price level, indicating how much can be bought with a given amount of money.

Line Segment QR

A part of a line that is bounded by two distinct end points, Q and R, and contains every point on the line between Q and R.

Unemployed Resources

Factors of production that are available for use but are not currently engaged in the production of goods or services.