A safety report is released that contends that sport utility vehicles are less prone to roll over during crashes than was previously thought. At the same time, the price of steel (used to produce motor vehicles) decreases. The net effect of these two incidents on the market for sport utility vehicles is a(n):
a. indeterminate change in price and an increase in equilibrium quantity.
b. indeterminate change in price and a decrease in equilibrium quantity.
c. decrease in price and an increase in equilibrium quantity.
d. increase in price and an increase in equilibrium quantity.
Question 2
A cut in taxes, combined with an increase in government purchases, would:
a. increase AD.
b. decrease AD.
c. leave AD unchanged.
d. have an indeterminate effect on AD.
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