Use the Following to Answer Questions

question 170

Multiple Choice

Use the following to answer questions:
Figure: Demand, Supply Shifts
-(Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D₁ and the initial supply curve is S₁. Suppose this depicts the market for corn. How does the market change when flooding in Iowa destroys a significant amount of the corn crop.

• A) S₁ will shift to S₂.
• B) D₁ will shift to D₂.
• C) S₁ will shift to S₃.
• D) There will be no change in supply or demand in the market for corn.

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Definitions:

Disposable Income

Income that remains for saving or spending after direct taxes (such as income tax) have been deducted from an individual's earnings.

Saving

The process of setting aside a part of current earnings for future use.

Interest Rate

Interest Rate is the cost of borrowing money, typically expressed as a percentage of the amount borrowed, affecting savings, investment, and consumer spending.

Consumption Spending

The total amount of money spent by households and individuals on goods and services for personal use.