A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose the Fed has just learned that some foreign economies are headed for recession, which will reduce U.S. exports. This is an economic shock that shifts the IS curve down
What would you do in response to the shock if you want to keep the economy at full-employment equilibrium under each of the following cases? (a) You use the classical (RBC) model. (b) You use the Keynesian (efficiency wage) model. (c) You use the extended classical model with misperceptions. In each case, show the IS—LM—FE diagram associated with your answer.
Deadweight loss refers to
A) losses in consumer surplus associated with excess government regulations. B) situations where market prices fail to capture all of the costs and benefits of a policy. C) net losses in total surplus. D) losses due to the policies of labor unions.
In the long-run, an increase in the budget deficit and an expansionary monetary policy would:
A) increase the price level only. B) increase both the price level and real income. C) increase real income only. D) none of the above.
Currently, the supply curve for human organs is perfectly inelastic
a. True b. False Indicate whether the statement is true or false