Price Controls such as price ceilings and price floors: Question 13 options: cau
ID: 1143298 • Letter: P
Question
Price Controls such as price ceilings and price floors:
Question 13 options:
cause neither shortage nor surplus when implemented by the government.
are designed to lower the price below market equilibrium when they are set as floors.
imposed by a government to change the price that is generated by a market equilibrium.
are designed to raise the price above market equilibrium when they are set as ceilings.
Which of the following answers is logically consistent with the Equation of Exchange?
Question 15 options:
If the government increases the money supply at a faster rate than the growth in the real economy, there will be no inflation.
If the economy is growing at 3%, velocity remains constant, and the money supply is growing at 7% we can expect prices to remain stable.
if the government raises the money supply at the same rate as the real economy grows, there will be no inflation.
If the economy is growing at 3%, velocity remains constant, and the money supply is growing at 6% we can expect prices to fall since the two numbers combined is less than 10%..
A)cause neither shortage nor surplus when implemented by the government.
B)are designed to lower the price below market equilibrium when they are set as floors.
C)imposed by a government to change the price that is generated by a market equilibrium.
D)are designed to raise the price above market equilibrium when they are set as ceilings.
Which of the following answers is logically consistent with the Equation of Exchange?
Question 15 options:
A)If the government increases the money supply at a faster rate than the growth in the real economy, there will be no inflation.
B)If the economy is growing at 3%, velocity remains constant, and the money supply is growing at 7% we can expect prices to remain stable.
C)if the government raises the money supply at the same rate as the real economy grows, there will be no inflation.
D)If the economy is growing at 3%, velocity remains constant, and the money supply is growing at 6% we can expect prices to fall since the two numbers combined is less than 10%..
Explanation / Answer
a) "C"
Price control and price ceiling are government intervention in the market which disturbs the equilibrium.
b) "C"
Output and money velocity are considered as constant. An increase in the money supply will increase the price to the same proportion. if the output is growing money supply will not increase the price.
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