Author Question: Refer to Figure 4-12 which shows the market for vitamins. Suppose the government imposes a price ... (Read 130 times)

Chloeellawright

  • Hero Member
  • *****
  • Posts: 588
Refer to Figure 4-12 which shows the market for vitamins. Suppose the government imposes a price ceiling of Pv. How will the price ceiling affect the quantity supplied, quantity demanded, and quantity exchanged?
 
  What will be an ideal response?

Question 2

What is the distinction between automatic and discretionary fiscal policy?
 
  What will be an ideal response?



AngeliqueG

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

The price ceiling will have no effect on the market outcome. An effective price ceiling must lie below the free market equilibrium. Thus, in this case the market outcome will be determined by forces of demand and supply.

Answer to Question 2

Automatic fiscal policy is triggered by the state of the economy with no need for any government action. Discretionary fiscal policy, however, requires an act of Congress to either change government spending and/or change taxes.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Signs and symptoms of a drug overdose include losing consciousness, fever or sweating, breathing problems, abnormal pulse, and changes in skin color.

Did you know?

Street names for barbiturates include reds, red devils, yellow jackets, blue heavens, Christmas trees, and rainbows. They are commonly referred to as downers.

Did you know?

Prostaglandins were first isolated from human semen in Sweden in the 1930s. They were so named because the researcher thought that they came from the prostate gland. In fact, prostaglandins exist and are synthesized in almost every cell of the body.

Did you know?

Drugs are in development that may cure asthma and hay fever once and for all. They target leukotrienes, which are known to cause tightening of the air passages in the lungs and increase mucus productions in nasal passages.

Did you know?

Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

For a complete list of videos, visit our video library