The imposition of price controls can be expected to
A)raise the natural rate of output and reduce unemployment.
B)raise unemployment in the short-run but decrease it in the long-run.
C)raise employment in the long-run,but reduce unemployment in the short-run.
D)raise employment in the short-run,but create market dislocations in other sectors.

Question

Quizplus · Accepted Answer

Imposition of price controls creates market disruptions and leads to unintended consequences such as shortages, reduced quality of goods, and black markets. In the short-run, employment may increase due to the increased demand for goods resulting from price decreases, but in the long-run, these effects dissipate, and the market experiences negative effects. Therefore, price controls are not an effective way to reduce unemployment in the long run.

The Imposition of Price Controls Can Be Expected to