Consider a market that is in equilibrium. If it experiences a decrease in supply, what will happen? The supply curve will shift to the:
A. left and the equilibrium price and quantity will rise.
B. left and the equilibrium price will increase and the equilibrium quantity will decrease.
C. left and the equilibrium price and quantity will fall.
D. right and the equilibrium price and quantity will fall.
B. left and the equilibrium price will increase and the equilibrium quantity will decrease.
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The income elasticity of demand is ________ for a normal good and ________ for an inferior good
A) positive; positive B) positive; negative C) negative; positive D) negative; negative
If a lender wants a real return of 6 percent and she expects inflation to be 4 percent, which of the following is the correct nominal interest rate to charge?
a. 4 percent b. 6 percent c. 2 percent d. 10 percent e. -2 percent