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Principles of Economics 2e

Self-Check Questions

Principles of Economics 2eSelf-Check Questions

Self-Check Questions

1.

In the labor market, what causes a movement along the demand curve? What causes a shift in the demand curve?

2.

In the labor market, what causes a movement along the supply curve? What causes a shift in the supply curve?

3.

Why is a living wage considered a price floor? Does imposing a living wage have the same outcome as a minimum wage?

4.

In the financial market, what causes a movement along the demand curve? What causes a shift in the demand curve?

5.

In the financial market, what causes a movement along the supply curve? What causes a shift in the supply curve?

6.

If a usury law limits interest rates to no more than 35%, what would the likely impact be on the amount of loans made and interest rates paid?

7.

Which of the following changes in the financial market will lead to a decline in interest rates:

  1. a rise in demand
  2. a fall in demand
  3. a rise in supply
  4. a fall in supply
8.

Which of the following changes in the financial market will lead to an increase in the quantity of loans made and received:

  1. a rise in demand
  2. a fall in demand
  3. a rise in supply
  4. a fall in supply
9.

Identify the most accurate statement. A price floor will have the largest effect if it is set:

  1. substantially above the equilibrium price
  2. slightly above the equilibrium price
  3. slightly below the equilibrium price
  4. substantially below the equilibrium price

Sketch all four of these possibilities on a demand and supply diagram to illustrate your answer.

10.

A price ceiling will have the largest effect:

  1. substantially below the equilibrium price
  2. slightly below the equilibrium price
  3. substantially above the equilibrium price
  4. slightly above the equilibrium price

Sketch all four of these possibilities on a demand and supply diagram to illustrate your answer.

11.

Select the correct answer. A price floor will usually shift:

  1. demand
  2. supply
  3. both
  4. neither

Illustrate your answer with a diagram.

12.

Select the correct answer. A price ceiling will usually shift:

  1. demand
  2. supply
  3. both
  4. neither
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