Suppose There Is a Decrease in Both the Demand for and Supply

question 43

Multiple Choice

Suppose there is a decrease in both the demand for and supply of a good.What happens to equilibrium price and quantity?

• A) Equilibrium quantity increases, but the effect on equilibrium price is ambiguous.
• B) Equilibrium quantity decreases, but the effect on equilibrium price is ambiguous.
• C) Equilibrium price increases, but the effect on equilibrium quantity is ambiguous.
• D) Equilibrium price decreases, but the effect on equilibrium quantity is ambiguous.

---

Definitions:

Postdated Check

A check written with a future date, preventing it from being cashed or deposited until that date.

Bank Reconciliation

The process of matching and comparing figures from the accounting records against those presented on a bank statement to ensure they are in agreement.

Deposit in Transit

Funds that have been deposited by a company in its bank account but have not yet been recorded by the bank, leading to a timing difference in the company's accounting records.

NSF Notation

A notation made by banks on a bounced check indicating "non-sufficient funds," meaning the account does not have enough money to cover the check.