A price ceiling in the housing market set below the equilibrium rent is known as which policy?

• A. Nominal GDP
• B. Rent control
• C. Real GDP
• D. GDP growth rate

Answer: (B)

Setting a price ceiling below the market-clearing rent creates a binding constraint that stops rents from rising to the level that would balance supply and demand. This policy is rent control. It aims to keep housing affordable, but because the price is kept artificially low, more people want to rent than there are units available, producing a housing shortage. Landlords may reduce maintenance or new construction, and some renters may face long waiting lists or reduced quality. The other terms refer to measures of economic output, not a housing price policy, so they don’t fit. So, the policy described is rent control.