As the economy started to recover from the Great Recession, businesses

QUESTION

As the economy started to recover from the Great Recession, businesses began to sell down inventories of overstocked goods. Under this scenario, demand eventually grows to be in line with available supply.

As the economy strengthens and consumer demand continues to grow, what happens next?
A) Prices drop.
B) Prices rise.
C) Supply increases.
D) Supply decreases.
E) Productivity drops.

ANSWER

Answer: B
Explanation: B) Once demand is in line with supply, additional demand shifts the intersection of the demand curve and the supply curve—and prices increase.