If the federal government sets a minimum price for wheat at $5.00 per bushel when the equilibrium price is $4.50, then
A) a surplus will be created causing the price to fall to the equilibrium price of $4.50.
B) a permanent surplus will develop because the government established the minimum price at $5.00.
C) a shortage will be created causing the price to rise to the equilibrium price of $4.50.
D) a permanent shortage will develop because the government established the minimum price at $5.00.
Answer: B
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The figure above shows Sam's budget line. Why will Sam not purchase 36 gallons of gasoline and 4 pounds of coffee?
A) because he does not like this combination B) because this combination does not contain enough coffee to satisfy him C) because this combination contains more gasoline than his gasoline tank will hold D) because he cannot afford this combination
Adding the market value of all final and intermediate goods and services in an economy in a given year would result in:
A. an amount less than GDP for that year. B. an amount greater than GDP for that year. C. the calculation of GDP for that year. D. the calculation of NDP for that year.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
How does an increase in the price level affect the aggregate quantity of goods and services demanded?
What will be an ideal response?