The Law of Demand Explains Why People

question 104

Multiple Choice

The law of demand explains why people:

• A) Crave certain goods.
• B) Are willing to buy more of a good as price falls.
• C) Are willing to pay more as marginal utility diminishes.
• D) Are able to buy more of a good as supply increases.

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Real Withdrawals

The process of taking out funds from an investment or savings account, adjusted for the effects of inflation, to maintain the purchasing power of the money.

Annual Interest Rate

The percentage increase in the value of money due to interest, calculated on a yearly basis.

Amortize

The method of distributing a loan into a sequence of set payments across a duration, encompassing both the principal amount and interest.