Of the following groups, who gains from rent controls?
A) landlords
B) construction workers and their union leaders
C) poor people who have a hard time earning enough income to pay high rents
D) high-income people who live in rent-controlled apartments
Answer: D) high-income people who live in rent-controlled apartments
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Among the components of a 45-degree (or income) line are consumption and
a. investment b. inventories c. exports d. saving e. imports
Saving is a leakage in the sense that
a. saving is lost to the economy and ultimately leads to stagnation. b. the financial system often makes negative profits. c. it often accompanies a trade deficit. d. consumers spend less than their total income.
Economists maintain that the price of a product has no effect on demand. How can this be true?
Assume potential GDP is $16 T. If the economy is in a short-run recession, there will be labor ____, which will cause wages to begin to ___
a. surpluses; decrease b. shortages; increase c. surpluses; increase d. shortages; decrease