Price Ceilings as Regulatory Policy

Steps:

• Identify the policy: Imposing a maximum price sets a price ceiling on a good to prevent excessive pricing.
• Classify the type: This directly controls market prices, which falls under government intervention in markets.
• Compare options: Fiscal involves taxes/spending, monetary affects money supply, regulation enforces rules on businesses, supply-side boosts production.
• Select match: Regulation best fits direct price controls.

Why C is correct:

• Regulation involves government rules to influence market behavior, and price ceilings are a classic regulatory tool to protect consumers from high prices.

Why the others are wrong:

• A: Fiscal policy uses government spending and taxation to influence the economy, not direct price limits.
• B: Monetary policy adjusts interest rates and money supply through central banks, unrelated to specific good prices.
• D: Supply-side policy promotes economic growth via incentives like tax cuts, not price restrictions.

Final answer: C