If Both the Demand Curve and the Supply Curve Shift

question 140

Multiple Choice

If both the demand curve and the supply curve shift to the right, we can unambiguously conclude that the

• A) market clearing price will increase.
• B) market clearing price will decrease.
• C) equilibrium quantity will increase.
• D) equilibrium quantity will decrease.

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Definitions:

Mexican Government

The federal constitutional republic of Mexico, which is governed by a president and a bicameral legislature.

Fixed Exchange-Rate System

An exchange rate regime where a country's currency value is pegged to another currency, a basket of currencies, or a commodity like gold.

Local Currency

The currency that is legally accepted within a country and typically used for all financial transactions within that geographical boundary.

Flexible Exchange Rates

A system where the value of a currency is determined by the foreign exchange market, depending on the supply and demand for that currency.