If Both Demand and Supply Increase, Price Will

question 227

Multiple Choice

If both demand and supply increase, price will

• A)always increase
• B)always decrease
• C)increase only if supply increases more than demand does
• D)increase only if demand increases more than supply does
• E)decrease only if supply increases less than demand does

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Interest-Bearing Note

A debt instrument that requires the issuer to pay interest to the holder at specified intervals up to the maturity date, when the principal amount is due to be repaid.

Discounting

The process of determining the present value of a payment or series of payments that will be received in the future.

Present Value Interest Factor

A factor used to calculate the present value of a sum that is to be received in the future, accounting for the time value of money.