Final answer:
The taste for sneakers severely declining affects the demand for sneakers because demand is defined by consumer's desire and willingness to pay. The correct answer is option a.
Step-by-step explanation:
If the taste for sneakers severely declines, what is being affected is the demand for sneakers, not the supply. Demand is the consumer's desire and willingness to pay a price for a specific good or service. When tastes change and consumers no longer prefer sneakers as they once did, their demand for sneakers goes down.
This decrease in desire for sneakers does not directly affect how many sneakers can be produced by manufacturers, which is the supply side of the market. Therefore, it is the demand that is affected in this scenario.
Similarly, in the financial market, when there is a fall in demand for money, it implies that borrowers are less inclined to take loans at the existing interest rates, which can lead to a surplus of available funds. If this fall in demand is significant, financial institutions might lower interest rates to entice more borrowing. Conversely, a rise in supply of money into the financial system, perhaps through actions by a central bank or increased savings by the public, would also lead to lower interest rates as more funds are available to lend.