Which of the following statements best describes price ceilings?
a. A price ceiling that is set at a relatively high level is nonbinding.
b. A price ceiling that is set at a relatively low level is nonbinding.
c. A price ceiling that is set at a relatively high level will have no practical effect unless the equilibrium price falls below the price ceiling.
d. A price ceiling that is set at a relatively low level will have no practical effect unless the equilibrium price soars high enough to exceed the price ceiling.
a. A price ceiling that is set at a relatively high level is nonbinding.
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If the Fed overshoots when responding to a negative demand shock:
A. it will cause deflation, which the Fed will fight by reducing the growth rate of the money supply. B. it will cause inflation, which the Fed will fight by increasing the growth rate of the money supply. C. it will cause inflation, which the Fed will fight by reducing the growth rate of the money supply. D. it will cause deflation, which the Fed will fight by increasing the growth rate of the money supply.
Which of the following statements best demonstrates the constraints under which individual consumers and society as a whole operate?
a. Only the individual opportunity set (or budget constraint) demonstrates the constraints under which individual consumers and society as a whole operate. b. Only the social production possibilities frontier demonstrates the constraints under which individual consumers and society as a whole operate. c. Neither the individual opportunity set (budget constraint) nor the social production possibilities frontier demonstrates the constraints under which individual consumers and society as a whole operate. d. Both the individual’s opportunity set (and budget constraint) and the social production possibilities frontier show the constraints under which individual consumers and society as a whole operate.