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If a Central Bank Wants to Counter the Change in the Price

question 28

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If a central bank wants to counter the change in the price level caused by an adverse supply shock,it could change the money supply to shift


Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service to prevent market prices from rising above a certain level.

Consumer Surplus

The variation between the price consumers are willing to offer for a product or service and the actual payment made.

Price Ceiling

A government-imposed limit on how high the price of a product can be charged in the market, intended to protect consumers from high prices.

Pounds of Berries

A unit of measure indicating the quantity of berries, communicated in terms of their total weight in pounds.

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