When the Supply And/or Demand Curve Shift, the New Market

question 104

Multiple Choice

When the supply and/or demand curve shift, the new market clearing price is

• A) reached instantaneously.
• B) reached only after the government intervenes in the market.
• C) reached after some period of adjustment.
• D) never reached.

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Definitions:

Inflation Rate

The percentage rate of increase in price levels over time, which can erode purchasing power.

Inflation Expectations

The rate at which people expect the prices of goods and services to increase in the future, which can influence economic behavior.

Unemployment Rate

The fraction of people in the labor market who are not employed but are seeking a job.

Short-run Phillips Curve

A graphical representation showing the inverse relationship between unemployment and inflation rates in an economy over the short term, suggesting a trade-off between the two.