Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will:
A. decrease, quantity demanded will decrease, and quantity supplied will increase.
B. decrease and quantity demanded and quantity supplied will both decrease.
C. decrease, quantity demanded will increase, and quantity supplied will decrease.
D. increase, quantity demanded will decrease, and quantity supplied will increase.
Answer: C
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When a tax is imposed on a good or service, the
A) revenue gained by the government is the excess burden. B) deadweight loss that arises from a tax is the excess burden. C) share of the tax paid by the buyer is the excess burden. D) share of the tax paid by the seller is the excess burden. E) amount the government collects as tax revenue is the deadweight loss from the tax.
Liquidity preference theory indicates that at lower interest rates
A) investment is greater. B) money demand is greater. C) consumption is greater. D) money supply is greater.
Negative externalities lead to over supply in a market
Indicate whether the statement is true or false
If the price index last year was 100 and today it is 104, what is the inflation rate over this period?
(a) -4%; (b) 1.4%; (c) 4%; (d) 40%.