Chapter 4: Q25 (page 105)
If the government imposed a federal interest rate ceiling of 20% on all loans, who would gain and who would lose?
Government imposed federal interest rate ceiling of 20% makes borrowers gain & lenders lose.
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Name some factors that can cause a shift in the
supply curve in labor markets.
A price ceiling will have the largest effect:
a. substantially below the equilibrium price
b. slightly below the equilibrium price
c. substantially above the equilibrium price
d. slightly above the equilibrium price
During a discussion several years ago on building a pipeline to Alaska to carry natural gas, the U.S. Senate passed a bill stipulating that there should be a guaranteed minimum price for the natural gas that would flow through the pipeline. The thinking behind the bill was that if private firms had a guaranteed price for their natural gas, they would be more willing to drill for gas and to pay to build the pipeline.
a. Using the demand and supply framework, predict the effects of this price floor on the price, quantity demanded, and quantity supplied.
b. With the enactment of this price floor for natural gas, what are some of the likely unintended consequences in the market?
c. Suggest some policies other than the price floor that the government can pursue if it wishes to encourage drilling for natural gas and for a new pipeline in Alaska.
Why are the factors that shift the demand for a product different from the factors that shift the demand
for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?
Suppose the U.S. economy began to grow more rapidly than other countries in the world. What would be the likely impact on U.S. financial markets as part of the global economy?
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