The basic argument against wage and price controls is that
A) they can be used only during periods of all-out war.
B) as a solution to inflation, they are popular with economists, not with politicians or the general public.
C) they require labor to take wage reductions before firms can reduce their prices.
D) they are not helpful as a short-run remedy, although they do work effectively over the long run.
E) they necessitate implementing other allocation schemes that often impair economic efficiency.

Question

Quizplus · Accepted Answer

Wage and price controls often require the implementation of other allocation schemes, such as rationing or queuing, which can impair economic efficiency. Price controls can also lead to shortages and black markets, while wage controls may lead to reduced incentives for workers and less willingness to work overtime or take on additional responsibilities. Therefore, while wage and price controls may seem like an attractive solution to inflation, they often have numerous unintended consequences that can harm the economy in the long run.

The Basic Argument Against Wage and Price Controls Is That