If a Price Ceiling Is to Be Binding or Effective,it

question 99

Multiple Choice

If a price ceiling is to be binding or effective,it should be set

• A)Below the equilibrium price,and it will create a market shortage.
• B)Below the equilibrium price,and it will create a market surplus.
• C)Above the equilibrium price,and it will create a market shortage.
• D)Above the equilibrium price, and it will create a market surplus.

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Definitions:

Inflationary Gap

A situation where the total demand for goods and services exceeds the total supply at current prices, leading to upward pressure on prices and inflation.

Full Employment GDP

The level of gross domestic product achieved when the economy is fully employing all available labor and resources, maximizing output.

Aggregate Supply

The aggregate amount of products and services that companies in an economy intend to sell over a particular time frame.

Deficit

A financial situation where expenses exceed income or imports exceed exports.