Question

Suppose that Brian, an economist from a research institute in Texas, and Crystal, an economist from a public television program, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:

Crystal: I think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain the improvement of living standards.
Brian: I think a switch from the income tax to a consumption tax would bring growth in living standards.
Crystal: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't.

The disagreement between these economists is most likely due to _____
Despite their differences, with which proposition are two economists chosen at random most likely to agree?

a. Immigrants receive more in government benefits than they contribute in taxes.
b. Having a single income tax rate would improve economic performance.
c. Rent ceilings reduce the quantity and quality of available housing.

Answer 1

Answer: c. Rent ceilings reduce the quantity and quality of available housing.

Explanation:

Economists are generally known to refuse to agree on most things due to the different schools of economic thought.

One thing they generally agree on however, is that rent ceilings reduce the quantity and quality of available housing.

The reason being that when a rent ceiling is imposed, some landlords will not see the need to improve their housing with the hope of charging higher rent rates which will lead to a reduction in housing quality.

Some landlords will not go into the rental business at all because they might doubt that the rent ceiling will provide them with enough rental income to offset the costs of constructing a building for rent.