Suppose both supply and demand increase. What effect will this have on the equilibrium quantity?
A. It may rise or fall.
B. It will rise.
C. It will remain the same.
D. It will fall.
Answer: B
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Properly enforced property rights will usually cause
A. lower levels of investment spending. B. lower levels of real interest rates. C. higher levels of investment spending. D. higher levels of real interest rates.
Exhibit 2-9 Production possibilities curve
Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?
A. Z to W. B. W to Y. C. W to X. D. X to Y.
According to the permanent income hypothesis, a temporary and relatively small increase in income would
A. cause an increase in consumption and saving by the same amount. B. cause a decrease in consumption and saving by the same amount. C. cause no change in consumption. D. cause a large increase in consumption.
You agree to lend $1,000 for one year at a nominal interest rate of 10%. You anticipate that inflation will be 4% over that year. If inflation is instead 3% over that year, which of the following is true?
A) The real interest rate you earn on your money is lower than you expected. B) The purchasing power of the money that will be repaid to you will be lower than you expected. C) The person who borrowed the $1,000 will be worse off as a result of the unanticipated decrease in inflation. D) The real interest rate you earn on your money will be negative.