Suppose the Government Imposes a Policy Which Does Not Allow

question 35

Multiple Choice

Suppose the government imposes a policy which does not allow interest rates in the home mortgage market to rise above a certain level.Given that this level is set below the equilibrium interest rate,which of the following is a consequence of this policy?

• A)There will be a surplus of mortgages in the market.
• B)The demand for mortgages will outstrip supply.
• C)The credit standards for people applying for loans will be tightened.
• D)All the individuals who apply for a mortgage will be able to get one.

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Definitions:

Intermediate Goods

Products used as inputs in the production of final goods or services, not sold directly to consumers.

Migration

The movement of people from one place to another, often with the intent of settling temporarily or permanently in the new location.

Developing Countries

Refers to nations with lower living standards, undeveloped industrial bases, and low Human Development Index (HDI) relative to other countries.

Foreign Exchange

The conversion of one currency into another for the purpose of trade, travel, or investment in the global market.