Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. Because price controls were in
effect at the time the embargo occurred, an economist would have most likely predicted that
A) the number of dollars one would need to pay at the pump (legally) for a full tank of gasoline would increase sharply.
B) the number of dollars one would need to pay at the pump (legally) for a full tank of gasoline would decline sharply.
C) long waiting lines and black markets would appear.
D) a surplus of gasoline would result.
C
You might also like to view...
Refer to the scenario above. The demand for Sporty's soccer balls is 2,500 units if ________
A) the price charged by Sporty is higher than the price charged by Go! B) the price charged by Go! is higher than the price charged by Sporty C) the price charged by Sporty is equal to the price charged by Go! D) the price charged by Go! is higher than the unit cost of producing a ball
A person who believes the economy is self-regulating also believes that
A) when there is a surplus in the labor market, the wage rate falls, and when there is a shortage in the labor market, the wage rate rises. B) it is better if the economy is in an inflationary gap than a recessionary gap. C) prices are flexible but wages are not. D) the economy is always in long-run equilibrium. E) the real balance effect does not operate in a recessionary gap.