Figure 4-17 -Refer to Figure 4-17. Suppose a Price Floor of $7.00

question 230

Multiple Choice

Figure 4-17
-Refer to Figure 4-17. Suppose a price floor of $7.00 is imposed. As a result,

• A) buyers' total expenditure on the good decreases by $20.00.
• B) the supply curve will shift to the left so as to now pass through the point (Q = 40, P = $7.00).
• C) the quantity of the good demanded decreases by 20 units.
• D) the price of the good continues to serve as the rationing mechanism.

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Definitions:

Government Securities

Financial instruments issued by the government to finance its expenditures, promising to pay back with interest.

Excess Reserves

Capital reserves held by banks that surpass the minimum reserve requirements, providing liquidity and stability to the banking system.

Money Supply

The total quantity of monetary assets available in an economy at a specific time, including notes, coins, and balances held in checking and savings accounts.

Discount Rate

The cost imposed on banks and similar entities for borrowing funds from the Federal Reserve's discount window.