Which of the following statements is correct?
A. If demand decreases and supply increases, equilibrium price will rise.
B. If demand increases and supply decreases, equilibrium price will fall.
C. If supply increases and demand decreases, equilibrium price will fall.
D. If supply decreases and demand remains constant, equilibrium price will fall.
Answer: C
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If an economy experiences deflation, the real interest rate
A) will be greater than the nominal interest rate. B) will be equal to the deflation rate, so long as the nominal interest rate is positive. C) will be negative when the nominal interest rate is positive. D) will be less than the nominal interest rate.
Consider an economy that has the following monetary data. The monetary base and the money supply are expected to grow at a constant rate of 20% per year. Inflation and expected inflation are 20% per year
Suppose that bank reserves and currency pay no interest, all currency is held by the public, and bank deposits pay no interest. What is the nominal value of seignorage over the year? A) $10 B) $60 C) $70 D) $200
When the discount rates fall, the cost:
a. of loans to bankers' best customers goes down. b. of loans between banks falls. c. of international loans falls. d. to banks of borrowing from the Fed falls. e. to savings and loans of borrowing money from the public falls.
On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. Suppose that the Minnesota State Park Service institutes a variable fee structure. On weekdays when the picnic areas get little use, the fee is zero. On normal weekends, the fee is $8 per person. On holiday weekends, the fee is $14 per
person. The fee system corrects a problem known as the a. Coase theorem. b. free rider problem. c. Tragedy of the Commons. d. public goods problem.