Price floor
What will be an ideal response?
A regulation that makes it illegal to trade at a price lower than a specified level
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Explain the concept of a self-fulfilling prophecy
What will be an ideal response?
Open market sale of government securities results in:
A) an increase in bank reserves. B) a decrease in bank reserves. C) a decrease in interest rates. D) none of the above.
When the federal government installs a price support program that requires the government to purchase all of a good not bought in the private economy at the support price, changes in producer surplus
A) are negative. B) are positive, but more than offset by the cost to consumers and the government. C) are positive, and not offset by the cost to consumers and the government. D) and consumer surplus are both positive.
When price decreases, consumer surplus
a. increases b. remains constant c. decreases d. becomes negative e. may increase or decrease