This Application addresses the concept of
A) inflation and the housing boom. B) the dangers of high interest rates.
C) increases in consumer wealth. D) the down-side of leverage.
Question 2
Suppose the current price of a pound of steak is 6 per pound and the equilibrium price is 9 per pound. What takes place?
A) There is a shortage, so the price rises and quantity demanded increases.
B) There is a shortage, so the price falls and quantity demanded increases.
C) There is a surplus, so the price falls and quantity demanded increases.
D) There is a shortage, so the price falls and quantity demanded decreases.
E) There is a shortage, so the price rises and quantity demanded decreases.
