Both Price Floors and Price Ceilings, When Effective, Lead to

question 137

Multiple Choice

Both price floors and price ceilings, when effective, lead to

• A) shortages.
• B) surpluses.
• C) an increase in the quantity traded.
• D) a reduction in the quantity traded.

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Definitions:

Future Value

The amount of money in the future that an amount of money today will yield, given prevailing interest rates

Risk-averse Individuals

People who prefer to avoid risk and would rather accept a lower expected return on an investment than subject themselves to higher volatility and potential loss.

Comparable Bad Things

Situations or items that have similarly negative attributes or impacts, allowing for a comparison of their undesirability.

Interest Rate

The percentage of a sum of money charged for its use, typically by a bank or financial institution to borrowers, or paid to savers and investors.