A Price Ceiling Means That

question 125

Multiple Choice

A price ceiling means that:

• A)there is currently a surplus of the relevant product.
• B)government is imposing a legal price which is below the equilibrium price.
• C)government wants to stop a deflationary spiral.
• D)government is imposing a legal price which is above the equilibrium price.

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Definitions:

Discretionary Policies

Economic policies based on judgment and choices by policymakers rather than set rules, often involving government spending and taxation decisions.

Policy Rules

Prescriptive guidelines or principles designed to guide decisions and achieve rational outcomes within an organization or government.

Monetarists

Economists who argue that the money supply's variations play a crucial role in influencing the national output in the short term and determining the price level over the long term.

Money Supply

The whole sum of money available in an economy, including cash, coins, and the balances in checking and savings accounts, at a specific period.