Price Control
Price Controls
Econ 360-002
Sonia Parsa
Sparsa1@gmu.edu
G00509808
Word Count: 1540
Abstract
This paper examines how, in the United States, the government imposes several forms of taxes and price controls and how all individuals are required to pay direct and indirect taxes. It looks at how the approach of taxation and how the constraints of taxation on goods and price controls affect the U.S. economy.
Introduction
Regulations have played a huge role in the political and economic world for centuries. There are various different types of regulation. One regulation that the government imposes under its tax policy is price control, which is not considered to be voluntary. Price control can play two different roles, a price ceiling or a price floor. A price ceiling is the maximum price that can be charged in the market for a certain good, causing shortages, and a price floor is the minimum price that can be charged in the market, which then causes surpluses. Measures are usually taken by a government under its regulatory policy to control wages and prices in an attempt to check cost-push inflation and wage-push inflation[1]. However, these policies never help the economy. Instead, it worsens the situation. Governments also impose price controls as an indirect mechanism for taxation. The most well-known price controls enforced by the United States government today are: the policy of minimum wage, rent control, and oil price control. Having enforced price controls generate opportunities for economy failure, i.e. shortages and surpluses, as well as opportunities within the black market, and international arbitrage.
The Economic Philosophy When a price control is forced by the government, it’s usually imposed to help or protect particular parts of the population which would be treated inequitably by the unfettered price system. But one must wonder which part of the population, the consumers or the producers? Is it not true that the consumers always feel
Econ 360-002
Sonia Parsa
Sparsa1@gmu.edu
G00509808
Word Count: 1540
Abstract
This paper examines how, in the United States, the government imposes several forms of taxes and price controls and how all individuals are required to pay direct and indirect taxes. It looks at how the approach of taxation and how the constraints of taxation on goods and price controls affect the U.S. economy.
Introduction
Regulations have played a huge role in the political and economic world for centuries. There are various different types of regulation. One regulation that the government imposes under its tax policy is price control, which is not considered to be voluntary. Price control can play two different roles, a price ceiling or a price floor. A price ceiling is the maximum price that can be charged in the market for a certain good, causing shortages, and a price floor is the minimum price that can be charged in the market, which then causes surpluses. Measures are usually taken by a government under its regulatory policy to control wages and prices in an attempt to check cost-push inflation and wage-push inflation[1]. However, these policies never help the economy. Instead, it worsens the situation. Governments also impose price controls as an indirect mechanism for taxation. The most well-known price controls enforced by the United States government today are: the policy of minimum wage, rent control, and oil price control. Having enforced price controls generate opportunities for economy failure, i.e. shortages and surpluses, as well as opportunities within the black market, and international arbitrage.
The Economic Philosophy When a price control is forced by the government, it’s usually imposed to help or protect particular parts of the population which would be treated inequitably by the unfettered price system. But one must wonder which part of the population, the consumers or the producers? Is it not true that the consumers always feel
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