If both the demand for a product and the supply of it decrease, then the equilibrium quantity will ________ and the equilibrium price will ________.
A) increase; either increase, decrease, or remain constant
B) decrease; either increase, decrease, or remain constant
C) increase; increase
D) increase; decrease
Answer: B) decrease; either increase, decrease, or remain constant
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If marginal utility of apples is diminishing and is a positive amount, consuming one more apple will cause
A) a consumer to go beyond her optimal consumption of apples. B) total utility to decrease. C) a consumer to get no satisfaction from consuming apples. D) a consumer's total utility to increase.
The equivalent to the Federal Reserve's discount rate in the European System of Central Banks is the
A) federal funds rate. B) marginal lending rate. C) deposit facility rate. D) lombard rate.
According to classical economists, the government should increase government purchases when
A) the benefits of the spending exceed the costs. B) the economy is in a recession. C) the economy is likely to go into a recession in the next six months to a year. D) inflation is lower than its targeted level.
When a temporary shock in the economy involves a restriction in supply ________
A) we refer to it as a negative supply shock B) a rise in commodity prices typically follows C) a reduction in output typically ensues D) all of the above E) none of the above