Some years ago New York City imposed rent controls in an effort to provide housing at "fair" prices for as many people as possible. The result was a serious shortage of housing and deterioration of existing rental properties. How would an economist have described the result in terms of economic efficiency?
Keeping the prices low discouraged the construction of housing in the city and the upkeep of existing housing. Interfering with free markets by preventing rental prices to increase prevented the market from reallocating sufficient resources to help cut down the shortage of housing efficiently. As a result, the MU of additional rental units exceeds the MC of production, but since the price is kept artificially low, landlords have little incentive to build new apartments.
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The income—expenditure identity says that
A) Y = C + S + T. B) Y = C + I + G. C) Y = C + I + G + NX. D) Y = C + I + G + NX + CA.
Which of the following sets legal reserve requirements?
a. Board of Governors b. District Federal Reserve Banks c. Federal Open Market Committee d. Federal Advisory Council e. Treasury Department
In the following graph, the price of labor is $15 per unit. The minimum cost of producing 1,000 units of output is:
A. $1,800 B. $ 150 C. $ 450 D. $ 600 E. none of the above
The sum of the revenue collected by the tax and the excess burden created by the tax is the
A. gross revenue. B. tax incidence. C. deadweight loss. D. total tax burden.