If a government limits interest rates to a level below equilibrium, how do savers and investors respond? How is the discrepancy resolved?
What will be an ideal response?
This is straight economics. Interest rate ceilings result in a quantity of funds demanded that exceeds the quantity supplied. The discrepancy is resolved through non-market rationing, on the basis of development policy or favoritism or both.
You might also like to view...
A perfectly competitive firm's supply curve
A) shows the relationship between the price and the quantity the firm will produce. B) is the portion of the marginal cost curve above the average variable cost curve. C) is upward sloping. D) All of the above are correct.
The perfectly competitive model assumes that: a. individual sellers can influence the market price
b. sellers can increase their total revenue by raising prices. c. firms can enter and exit the industry with relative ease. d. firms compete by varying a product's quality rather than a product's price.
If net exports are reduced, the expenditure schedule will shift
a. downward and equilibrium real GDP will rise. b. upward and equilibrium real GDP will rise. c. downward and equilibrium real GDP will fall. d. upward and equilibrium real GDP will fall.
The average fixed cost curve
a. always declines with increased levels of output. b. always rises with increased levels of output. c. declines as long as it is above marginal cost. d. declines as long as it is below marginal cost.