Crash Course: Price Controls

What was the purpose of President Nixon's 90-day price and wage freeze in the early 1970s?

• To reduce unemployment

• To fight inflation

• To boost exports

• To increase consumer spending

What is a price ceiling?

• A minimum price set by the government

• A price set by consumers

• A maximum price set by the government

• A price set by producers

What happens when a price ceiling is set below the equilibrium price?

• It creates a shortage

• It increases production

• It creates a surplus

• It has no effect

Which country was used as an example of the negative effects of price ceilings on consumer products?

• Venezuela

• Mexico

• Brazil

• Argentina

What is the main argument against rent control according to economists?

• It increases the quality of housing

• It reduces the quantity and quality of housing available

• It encourages new construction

• It makes housing more affordable

What is a price floor?

• A maximum price set by the government

• A minimum price set by the government

• A price set by producers

• A price set by consumers

What is one of the main criticisms of agricultural subsidies?

• They help poor farmers

• They increase food production

• They discourage innovation

• They reduce food prices

What was the purpose of the Agricultural Adjustment Act of 1933?

• To eliminate farm subsidies

• To reduce farm prices

• To increase food prices

• To prop up farm prices and farmers

Why do some economists support subsidies for renewable energy technology?

• They believe it creates false demand

• They argue it discourages innovation

• They believe it increases market prices

• They think it reduces deadweight loss

What is the main takeaway from the debate on subsidies?

• Subsidies depend on the values of society and markets in question

• Subsidies are always bad

• Subsidies are always good

• Subsidies should be eliminated