The Pros And Cons Of Government Intervention

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ECONOMICS In many parts of the world, there is a shortage of available and affordable housing for people to buy. It may be because of scarcity in land supply and increase in the population. Land is a limited resource and the means to buy it is also limited. The rapid increase in the population has led to an increase in the demand of land. In many parts of the world, the Government implements monetary and fiscal policies to control the supply of land. It introduces new taxation policies, subsidy policies and changes in the interest rates. It interferes with the decision made by an individual or a group of organisation on social and economic matters. This type of regulatory action taken by the Government is known as Government Intervention.…show more content…
economy. Residential real estate provides housing for families. It is often the greatest source of wealth and savings for many families. Commercial real estate, which includes apartment , creates jobs and spaces for retail, offices and manufacturing. Real estate business and investments provide a source of revenue for millions. In 2016 real estate construction contributed $1.2trillion to the nation’s economic output and 6 percent of U.S. gross domestic product. It exceeded its 2006 peak of $1.195 trillion. At that time, real estate construction was a hefty 8.9 percent component of GDP. Real estate construction is labour intensive. It is because of this that a drop in housing construction was a big contribution to the recession's high unemployment…show more content…
There are 2 types of price controls: price ceilings and price floors. A price ceiling is the legal maximum price for a good or service, while a price floor is the legal minimum price. Although both can be imposed, the government usually only selects either a ceiling or a floor for particular goods or services.When prices are established by a free market, then there is a balance between supply and demand. When the government imposes price controls, then there will be either excess innsupplyor demand, as the legal price is often very different from the market price. Indeed, the government imposes price controls as it is not satisfied with the market price.A price ceiling creates a shortage when the legal price is below the market equilibrium price, but has no effect on the quantity supplied if the legal price is above the market equilibrium price. A price ceiling below the market equilibrium price creates a shortage that causes consumers to compete vigorously for the limited supply. Supply is limited because suppliers are not getting the prices that would allow them to earn a

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