How do legal controls on prices lead to corruption?
A. Persons who benefit from the controls are willing to bribe officials to keep the controls in place.
B. Persons who make the laws may favor certain groups at the expense of others.
C. Selling in the black market is very profitable, and persons therefore willingly break the law.
D. Discrimination may occur as a means to limit buying or selling select groups.
E. All of these responses are correct.
Answer: E
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Which of the following is most likely to be observed in a community where legal ceilings are imposed on residential rents?
A) Landlords will do a better job of property maintenance. B) People moving into the community will have difficulty locating residential space to rent. C) Poor people will be able to find adequate housing. D) Tenants will reduce their use of housing space. E) The people most in need of housing will be able to obtain the space they want.
Suppose that last year you borrowed $100 at 5 percent interest to purchase a $100 pair of Nike cross-training shoes. This year you repaid the bank with interest. If the inflation rate was 10 percent last year, your purchase of the shoes would:
A. make you an inflation winner as you saved $5 on the shoes. B. make you an inflation loser as you paid $5 more than you should have for the shoes. C. not be affected at all by the inflation rate. D. be taxed according to COLA adjustments.
Which of the following bank-related policies of the Fed fosters huge moral hazard problems:
A. Printing of paper currency for banks to distribute B. Too-big-to-fail policy C. Check-clearing and deposit transfers D. Providing banking services to governments
Skill-biased technological change increases wage inequality by altering the ________ high-skilled workers relative to low-skilled workers.
A. reservation price of B. supply of C. demand for D. mobility of