If Prices Are Held Below the Equilibrium Price,________

question 17

Multiple Choice

If prices are held below the equilibrium price,________.

• A) there will be a surplus in the market
• B) there will be a shortage in the market
• C) social surplus will be maximized
• D) all firms will earn positive economic profits

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Definitions:

Government Policies

Measures and actions taken by a government to influence or regulate the economy and societal welfare.

Natural Rate

The long-term rate of unemployment or the amount of unemployment that exists when the labor market is in equilibrium and the economy is producing at its potential output.

Expected Inflation

The rate at which people predict the general level of prices will rise in the future.

Actual Inflation

The real-time increase in the general price level of goods and services in an economy over a period of time.