This topic contains a solution. Click here to go to the answer

Author Question: Whenever a price floor is imposed above equilibrium price, it is true that: a. supply will increase ... (Read 96 times)

daltonest1984

  • Hero Member
  • *****
  • Posts: 536
Whenever a price floor is imposed above equilibrium price, it is true that:
 a. supply will increase due to a higher price and a surplus will result.
 b. supply will increase due to a higher price until it just equals the quantity demanded.
  c. demand will increase due to a higher price and a shortage will result.
 d. quantity supplied will exceed the quantity demanded.

Question 2

Why does a larger government budget deficit increase the magnitude of the crowding-out effect?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

jojobee318

  • Sr. Member
  • ****
  • Posts: 298
Answer to Question 1

d

Answer to Question 2

The crowding-out effect states that the government borrows to pay for the deficit, it drives up the interest rates in the marketplace for all other borrowers. This higher interest rate then discourages consumers and business from borrowing. In other words, the government borrowing for deficit financing crowds out private spending and investment. Therefore, the greater the increase in the deficit, the larger these effects will be.





 

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

Did you know?

Hippocrates noted that blood separates into four differently colored liquids when removed from the body and examined: a pure red liquid mixed with white liquid material with a yellow-colored froth at the top and a black substance that settles underneath; he named these the four humors (for blood, phlegm, yellow bile, and black bile).

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Each year in the United States, there are approximately six million pregnancies. This means that at any one time, about 4% of women in the United States are pregnant.

Did you know?

Famous people who died from poisoning or drug overdose include, Adolf Hitler, Socrates, Juan Ponce de Leon, Marilyn Monroe, Judy Garland, and John Belushi.

For a complete list of videos, visit our video library