Thursday, March 31, 2022

The uses of price controls

 During the Second World War, the US government tried to use savings to mop up demand and keep consumer prices stable. Price stability through regulation also helped to convince workers to save their income, as they were more confident that the money they saved would keep its value and so they could defer consumption. 

In post-war China, the government used price controls to redistribute resources from Agriculture to Heavy Industry. By suppressing the payments to Agriculture, you also limit the resources which are directed to producing goods for those who work in that sector. 





 

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