Which of the following can occur if price controls are imposed on a product?
A. Persistent shortages
B. Illegal markets
C. Illicit channels of distribution
D. Industry investment slows or stops
E. All of these responses are correct.
Answer: E
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According to the text, today's Lorenz curve is
A. a vertical line. B. less bowed than in 1929. C. a straight line. D. more bowed than in 1929.
The nonlabor income of households will increase, causing consumption to increase and labor supply to decrease, if the government
A. increases the personal income tax. B. implements contractionary fiscal policy. C. decreases transfer payments. D. decreases the corporate profits tax.
Firms are making profits in an increasing-cost industry. Which of the following statements describes what will happen in the long run?
A. Firms will exit this industry, causing the industry supply schedule to shift to the right and the LRAC curve to shift down. B. More firms will enter this industry, causing the industry supply schedule to shift to the right and the LRAC curve facing firms to shift down. C. More firms will enter this industry, causing the industry supply schedule to shift to the right and the LRAC curve facing firms to shift up. D. Firms will exit this industry, causing the industry supply schedule to shift to the left and the LRAC curve to shift down.
Seignorage is also known as an inflation tax since ________
A) money balances lose value in real terms B) inflation can be caused by rising energy costs C) higher interest rates can crowd-out investment spending D) budget deficits entail an increase in the size of the national debt