Macroeconomics II Week 1 (Autosaved)

Macroeconomics II Week 1 (Autosaved) - Macroeconomics II...

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Macroeconomics II Unit 1 Macroeconomics II Unit 1 Andrew L. Foxworth
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Macroeconomics II Unit 1 Price Controls Question #4 4). Explain why economist usually oppose controls on prices. This is explained in the txt as one of the ten principles of economics. Which states that markets are usually a good way to organize economic activity. This principle explains why economist usually oppose price ceilings and floors. To economist, prices are not the outcome of some haphazard process. Prices, they contend, are the result of the millions of business and consumer decisions that lie behind the supply and demand curves. Prices have the crucial job of balancing supply and demand and, thereby, coordinating economic activity. When policy makers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources. In other words the price regulation would make it difficult to gauge the true supply and demand of society. ( Chapt. 6 pg. 121-2) Works Cited : Principles of Economics by N. Gregory Mankiw fifth
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Macroeconomics II Week 1 (Autosaved) - Macroeconomics II...

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