Following the Lifting of Price Controls That Had Been Implemented

question 9

Multiple Choice

Following the lifting of price controls that had been implemented in the early 1970s, inflation skyrocketed.  Economists' explanations for this acceleration in the price level include

• A) the increase in the money supply that also occurred during the early 1970s.
• B) increases in the federal government deficit, especially in 1971 and 1972.
• C) supply-side shocks in oil and food.
• D) the release of inflationary pressures that built up during the period of price controls.
• E) All of the above.

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Definitions:

Initial Margin

The minimum amount of funds required to open a position in the futures market, intended to cover potential losses.

Maintenance Margin

The minimum amount of capital that must be maintained in a margin account after a purchase or trade, to cover the risk of loss.

Margin Call

A requirement from a broker for an investor to add more cash or securities to their account to mitigate potential losses.

Short 100 Shares

The action of borrowing 100 shares of a stock to sell them with the expectation of buying them back later at a lower price.