Government imposed price controls often lead to
A) illegal trades of the good.
B) the most efficient use of resources.
C) the equilibrium solution in terms of price and quantity.
D) maximization of profits.
Answer: A
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According to the quantity theory of money, inflation causes an increase in the money supply
Indicate whether the statement is true or false
An increase in the monetary base that goes into ________ is not multiplied, while an increase that goes into ________ is multiplied
A) deposits; currency B) excess reserves; currency C) currency; excess reserves D) currency; deposits
The consumer optimum for consuming two goods is achieved when
A. the marginal utility per last dollar spent is equal for the two goods. B. the total utility from each good is equal. C. the price multiplied by the marginal utility is equal for the two goods. D. the price of each good is equal.
You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $400 billion; (2) investment = $40 billion; (3) government purchases = $90 billion; and (4) net export = $25 billion. If the full-employment level of GDP for this economy is $600 billion, then what combination of actions would be most consistent with closing the GDP-gap here?
A. Increase government spending and taxes B. Decrease government spending and taxes C. Decrease government spending and increase taxes D. Increase government spending and decrease taxes