If Price Controls Are So Harmful, Why Would a Country

question 137

Multiple Choice

If price controls are so harmful, why would a country ever impose them?

• A) No one really knows.
• B) Price controls are usually thought to be beneficial.
• C) Politicians have strong incentives to respond to the public when prices increase sharply.
• D) People usually see the consequences of price controls but think they will be a good policy.

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Definitions:

Premium

The additional cost above the normal or nominal amount, usually associated with insurance premiums, bond market pricing, or superior products and services.

Contra Liability Account

An account on a company's balance sheet that decreases the balance of a liability account to reflect its net value.

Discount

A discount refers to a reduction from the usual cost of an item or service, offered to incentivize purchase or payment.

Bonds Payable

A long-term liability account that records the amounts owed by an entity to bondholders, to be repaid at a future date.