In the Following Figure, the First Panel Shows a Market

question 24

True/False

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
In the figure,
D: Demand curve for automobiles
S₁: Supply curve of automobiles prior to regulation
S₂: Supply curve of automobiles after regulation
FG: Clean up cost per unit
-Restrictions on the types of food additives that breakfast cereal manufacturers can use is an example of a social regulation.

---

Definitions:

Depository Institution

A financial institution legally allowed to accept monetary deposits from consumers, such as banks and credit unions.

Federal Home Loan Bank Board

A now-defunct U.S. government agency that oversaw the Federal Home Loan Banks, which were created to support home mortgage lending and community investment.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, as dictated by central banking authorities.

Excess Reserves

These are bank reserves held in excess of what is required by regulations, which can be lent out to generate income.