Wage and price controls imposed for an extended period of time are likely to result in:
A) surpluses.
B) efficient markets.
C) black markets.
D) lower inflation rates once the controls are lifted.

Question

Quizplus · Accepted Answer

Wage and price controls usually create shortages or surpluses in the regulated goods or services, leading to the emergence of black markets where unregulated pricing can take place. Additionally, wage and price controls can lead to reduced supply and lower quality of goods and services, harming market efficiency. Finally, once the controls are lifted, inflation rates may rise as the distorted market readjusts to its natural state.

Wage and Price Controls Imposed for an Extended Period of Time