New Housing Takes Some Time to Build, So Rent Control

question 227

Multiple Choice

New housing takes some time to build, so rent control creates larger shortages in the:

• A) long run than in the short run because short-run supply is more elastic.
• B) long run than in the short run because long-run supply is more elastic.
• C) short run than in the long run because short-run supply is more elastic.
• D) short run than in the long run because long-run supply is more elastic.

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Definitions:

Discount Rate

The Discount Rate is the interest rate set by central banks at which financial institutions can borrow reserves, influencing monetary policy and the money supply.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of banks, and providing financial services to depository institutions.

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance federal government spending, considered very low risk.

Full-Employment Output

is the level of output that an economy can produce when operating at a full employment level, where all available labor and resources are being used efficiently.