Which of the following is true of a price floor?
a. A price floor allows supply and demand to function effectively.
b. A price floor is set such that the price is not allowed to increase above a certain level.
c. A price floor is beneficial to buyers in a market.
d. A price floor usually creates a shortage of a good in a market.
e. A price floor is set such that the price is not allowed to decrease below a certain level.
e
You might also like to view...
Refer to Figure 4.1. The income effect of the price change in food on the quantity of food purchased is:
A) the change from F3 to F1. B) the change from F3 to F2. C) the change from F2 to F1. D) the change from F1 to F2. E) none of the above
If monetary policymakers respond aggressively to current inflation above the target inflation rate, the:
A. dynamic aggregate demand curve would have a steep slope. B. monetary policy reaction curve would have a positive and steep slope. C. monetary policy reaction curve would be flat. D. dynamic aggregate demand curve would shift rightward.