Which of the Following Factors Will Shift the Demand Curve

question 153

Multiple Choice

Which of the following factors will shift the demand curve to the left?

• A)An increase in the price of a substitute product.
• B)A decrease in the price of a complementary product.
• C)An increase in income if the product is an inferior product.
• D)The expectation that future prices of the product will be higher.

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Definitions:

Arbitrage Opportunities

Situations in which it is possible to simultaneously buy and sell assets in different markets or in different forms to benefit from price differences without risk.

Nominal Risk-free Rate

The interest rate on a risk-free security that does not account for inflation.

Purchasing Power Parity

An economic theory that states that the exchange rate between two currencies is equal to the ratio of the currencies' respective purchasing power.

Relative Purchasing

The comparison of the purchasing power of various currencies against goods and services, adjusting for their price differences in different countries.