Assume that supply increases slightly and demand increases greatly. Which of the following will happen?
a. equilibrium price will fall and equilibrium quantity will rise
b. equilibrium price will rise and equilibrium quantity will fall
c. equilibrium price will rise and equilibrium quantity will rise
d. equilibrium price will fall and equilibrium quantity will fall
e. neither equilibrium price nor equilibrium quantity will change
C
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Which of the following statements is TRUE?
A) investment = disposable income + consumption B) saving = personal income + consumption C) saving = personal income - consumption D) saving = disposable income - consumption
Suppose the government has a budget deficit of $2 billion. If the Ricardo-Barro effect is correct, then how much crowding out of investment occurs?
A) exactly equal to $2 billion dollars B) more than $2 billion C) some crowding out occurs, but less than $2 billion D) No crowding out occurs and investment does not change. E) No crowding out occurs because investment increases by $2 billion.