What Do We Know About Price Ceilings and Price Floors

question 114

Multiple Choice

What do we know about price ceilings and price floors

• A)They are desirable because they make markets more efficient as well as equitable.
• B)They cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price.
• C)They can be enacted to restore a market to equilibrium.
• D)They are imposed because they can make low-income households in the economy better off without causing adverse effects.

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Definitions:

Bond Issue

The process by which a borrower, such as a company or government, raises funds by selling bonds to investors, with the promise to pay back with interest at future dates.

Term Bonds

Term bonds are fixed income securities issued with a fixed maturity date at which the principal amount is due to be paid to investors.

Interest Dates

Specific dates on which interest payments are made or calculated on bonds, loans, or deposits.

Bond

A financial device signifying a loan provided by an investor to a borrower, usually in the form of corporations or government entities.