When the Government Removes a Binding Price Floor

question 80

Multiple Choice

When the government removes a binding price floor:

• A)quantity demanded will decrease and quantity supplied will increase.
• B)quantity demanded will increase and quantity supplied will decrease.
• C)excess demand will develop.
• D)excess supply will develop.

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Definitions:

Indirect Effects

Consequences of a business or economic action that are not immediate or direct but occur as a secondary effect.

Direct Effects

The immediate impact of an action or policy, without considering the subsequent or secondary outcomes.

Political Risk

The risk that political conditions in a host country might change, negatively affecting foreign businesses.

Political Risk

The risk of losses due to political instability or changes in government policy that can affect investment values or business operations.