Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. Because price controls were in
effect at the time the embargo occurred, an economist would have most likely predicted that
A) the number of dollars one would need to pay at the pump (legally) for a full tank of gasoline would increase sharply.
B) the number of dollars one would need to pay at the pump (legally) for a full tank of gasoline would decline sharply.
C) long waiting lines and black markets would appear.
D) a surplus of gasoline would result.
C
You might also like to view...
The above figure shows the market demand curve for mobile telecommunications (time spent on a mobile phone). If the price were $2.50, consumer surplus equals
A) $301.00. B) $924.50. C) $1,225.50. D) $0
A risk-neutral individual will make investment decisions purely based on net present value because
A) she doesn't care about utility. B) utility is a linear function of wealth. C) she loves to take risk. D) net present value is always more than expected utility.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In a partnership, debts accumulated by one partner
A) are the responsibility of that partner only. B) are the responsibility of the other partners as well. C) are the responsibility of all the employees of the partnership, regardless of whether those employees are partners. D) are the responsibility of the other partners only up to the amount each partner initially invested in the partnership.