Government policies such as price controls, rent controls, and quantity restrictions have the effect of
A) promoting the attainment of an unhindered market equilibrium.
B) allowing quantity demanded to adjust to equality with aggregate supply.
C) creating excess quantities demanded or excess quantities supplied.
D) pushing prices to market clearing levels more rapidly than private market forces.
Answer: C
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Suppose the full-employment equilibrium real wage rate is $11 per hour while the actual real wage rate is $12 per hour. If the actual real wage rate does not change, then
A) job rationing will decrease. B) the production function will shift downward. C) job search will decline. D) job rationing will occur. E) a positive Okun Gap will occur.
To provide quantitative answers to policy questions
A) it is typically sufficient to use common sense. B) you should interview the policy makers involved. C) you should examine empirical evidence. D) is typically impossible since policy questions are not quantifiable.