-Refer to the Above Figure

question 376

Multiple Choice

-Refer to the above figure. Other things being equal, when the government imposes a price floor at P₂, then we would expect

• A)the quantity demanded is Q₂.
• B)a surplus will occur.
• C)price to decline until an equilibrium is achieved at P₀.
• D)consumers to bid against each other for goods and force the price even higher.

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Definitions:

Fiscal Policy

Government policies regarding taxation and spending to influence the economy.

Monetary Policy

Monetary policy refers to the process by which the central bank of a country manages the money supply and interest rates to influence economic activity and maintain economic stability.

Discretionary

Pertaining to funds or spending that is subject to decision or choice by a party or authority.

Balanced Budget Amendment

A proposed federal constitutional rule requiring that the government not spend more than its income in a fiscal year.