Government capping commodities
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obadiah
Apprentice
Joined: 22 Mar 2007
Posts: 2
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 Posted: 06/08/08 - 09:04 Post subject: |
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| Hi there people. My name is Vince and I would appreciate if you could tell me something about economic policy. I heard that sometimes government can directly influence the prices of some goods. Can you tell me: what is the purpose of government capping commodities? Thank you in advance for your posts. |
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marlow
Apprentice
Joined: 06 Nov 2005
Posts: 2
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| Posted: 07/07/08 - 23:29 Post subject: |
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| Hello to you too, Vince. Yes indeed, government can impose limits to the prices of some goods. That is one of the instruments of economic policy, although I think that it’s not a good one. It is applied to some basic goods in order to protect the living standard of the poorest people. One typical government capping commodity is bread. This instrument has been heavily used in ex communist countries, which lead to non-market price. It can have some consequences in case of excessive use. Well, that would be all I can tell you about this subject. I hope that you will find this post useful. Take care! |
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