Exhibit 16-1 -Referring to Exhibit 16-1, an Increase in the Interest Rate

question 159

Multiple Choice

Exhibit 16-1
-Referring to Exhibit 16-1, an increase in the interest rate will cause a move from

• A)B to A
• B)A to B
• C)D_M to D_M'
• D)D_M to D_M*
• E)C to D

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Definitions:

Supply and Demand

The basic economic principle that determines the price of goods and services in a market, based on the quantity available (supply) and the desire of consumers to purchase (demand).

Demand Curve

A visual model that illustrates the link between the cost of a commodity and the volume of demand from buyers at those costs.

Secondary Market

A marketplace where investors buy and sell securities, such as stocks and bonds, from other investors rather than from issuing companies directly.

Ticket Price

The cost charged for admission to an event, such as a concert, movie, or sports game.