Chuck Drives Past the Same Gas Station Every Day

question 132

Multiple Choice

Chuck drives past the same gas station every day.He realizes that the gas station always changes its prices on Tuesdays but keeps the price steady the rest of the week.On Saturday,Chuck turns on the news and hears a report projecting that the price of gasoline is going to increase.Holding all else constant,what do you think would happen to Chuck's demand for gasoline on Monday?

• A) His demand would shift to the right.
• B) His demand would shift to the left.
• C) You would see a movement down on his demand curve but no shift.
• D) You would see a movement up on his demand curve but no shift.
• E) You would see nothing happen to his demand curve until the price changed on Tuesday.

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Definitions:

Say's Law

A principle that supply creates its own demand in the market.

Recession

A brief era of economic contraction marked by diminished trading and industrial output, commonly indicated by a reduction in GDP across two successive quarters.

Monetarists

Economists who emphasize the role of governments in controlling the amount of money in circulation.

Money Supply

The collective sum of money in an economy, taking into account cash, coins, and balances within checking and savings accounts, at a specific timeframe.