Lowincomesville is a poor town. The mayor has decided to impose a law to cut all rental rates on apartments in half and to fix them at this level. Will this help the poor? Why or why not? Be sure to distinguish between the short run and the long run
The immediate effect will be a benefit to those currently living in apartments. Such a move, fixing rents below their equilibrium value, will create a shortage. We would expect a decline in rental housing as well as a decline in quality. In the long run, the poor may be worse off due to a lack of rental housing.
You might also like to view...
Dumping refers to
A) exporting products that do not meet domestic safety standards. B) selling inferior products to unsuspecting consumers. C) illegally avoiding tariffs by selling products on the black market. D) selling a product for a price below its cost of production.
Price discrimination is welfare reducing
A) False, price discrimination can increase the coverage of a market thereby increasing welfare. B) False, price discrimination limits the coverage of a market thereby increasing welfare. C) True, price discrimination limits the coverage of a market thereby increasing welfare. D) True, price discrimination can increase the coverage of a market thereby increasing welfare.
In the long run, a decrease in the money supply growth rate
a. shifts the short-run Phillips curve left so inflation returns to its original rate. b. shifts the short-run Phillips curve left so unemployment returns to its natural rate. c. Both A and B are correct. d. None of the above is correct.
An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply. B. increase in aggregate demand. C. increase in short-run aggregate supply. D. decrease in aggregate demand.