Figure 4-3 -Figure 4-3 Indicates the Demand (D) and Supply (S) for Supply

question 233

Multiple Choice

Figure 4-3
-Figure 4-3 indicates the demand (D) and supply (S) for the rental housing market in a large city. If the government imposed a price ceiling of a, which of the following would be true?

• A) The quantity of rental housing demanded would be t.
• B) The quantity of rental housing supplied would be r.
• C) There would be a shortage of rental housing.
• D) All of the above are true.

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Definitions:

Inflation Premium

The additional interest rate that lenders charge borrowers to compensate for the loss of purchasing power due to inflation.

Short-Term Bond

A bond that matures in a short period, usually less than five years, making it less sensitive to interest rate changes compared to long-term bonds.

Default Risk Premium

The additional return that investors require to compensate them for the risk of default by the borrower.

Par Value

The face value of a bond or stock, representing the amount that the issuer agrees to pay at maturity or the base value of a stock set by the issuing company.