Suppose You Live in a Community with No Price Controls

question 116

Multiple Choice

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a binding price ceiling on most products?

• A) Prices in the legal market in the community with a binding price ceiling will rise.
• B) Prices in the legal market in the community with a binding price ceiling will fall.
• C) There will be shortages in the community with a binding price ceiling.
• D) More consumers will purchase the product in the community with the price ceiling.
• E) The black market in your community will be larger than the black market in the community with the binding price ceiling.

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Definitions:

International Bonds

Bonds issued in a country by a non-domestic entity, allowing investors to gain exposure to foreign markets.

Single Currency

A monetary system in which a single legal tender is used across an economic or political region, facilitating trade and economic policy.

Foreign Bonds

Bonds issued by a country or company that are not denominated in the currency of the country in which they are sold.

International Bonds

Bonds issued in a country by a foreign entity, in the currency of the country where it is issued, as a way for the issuer to gain access to a foreign capital market.