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Assume a Price Ceiling Is Imposed at the Current Equilibrium

question 23

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Assume a price ceiling is imposed at the current equilibrium price in the market for wheat. If the supply of wheat then decreases as a result of bad weather, what will result?


Definitions:

Kenyan Shillings

The official currency of Kenya, which is subdivided into 100 cents.

Floating Rate System

A currency exchange regime where a country's currency value is allowed to fluctuate in response to foreign exchange market mechanisms.

Government Intervention

Refers to regulatory actions taken by a government to affect its economy, which can include policies and laws to correct market inefficiencies and promote social welfare.

Current Account

A component of a country's balance of payments that measures the balance of trade in goods and services plus net earnings from abroad and net transfer payments over a period of time.

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