In a Constructing the Demand Graph to Show How the Price

question 81

Multiple Choice

In a constructing the demand graph to show how the price of a good price affects how much of it the buyers will buy, the convention that economists follow is to measure price on the:

• A) Horizontal axis because it is the independent variable
• B) Vertical axis because it is the dependent variable
• C) Vertical axis even though it is the independent variable
• D) Horizontal axis even though it is the dependent variable

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Definitions:

Fixed Incomes

Fixed incomes refer to types of investment that pay regular interest or dividends to investors and have the principal amount returned at maturity.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of borrowing costs or investment returns.

Relative Prices

The price of a good or service compared to the price of another, indicating the trade-off between choosing one over the other.

Demand for Loanable Funds

The desire for borrowing money that exists among individuals, businesses, and governments in an economy, usually influenced by interest rates.