When the government intervenes in markets with bystanders, why does it do so?
a) to protect the interests of bystanders
b) to make certain all benefits are received by market participants
c) to better coordinate the actions of buyers and sellers
d) to increase production when negative externalities are present
Ans: a) to protect the interests of bystanders
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The main attractive feature of a negative income tax program is
a. it is politically clean and simple b. it keeps the IRS out of the picture c. it avoids cash payments to the poor d. it is totally financed out of the incomes of the poor creating for them a sense of individual responsibility e. it only subsidizes the unemployed
Which of the following is correct?
a. The classical dichotomy separates real and nominal variables. b. Monetary neutrality is the proposition that changes in the money supply do not change real variables. c. When studying long-run changes in the economy, the neutrality of money offers a good description of how the world works. d. All of the above are correct.
Advocates of competitiveness as a argument for trade protection
a) apply an adversarial business model to international trade b) confuse economic growth with comparative advantage c) favor protection of capital-intensive industries d) fail to appreciate the role of industrial restructuring e) all of the above
An investment is ________ if it is hedged against exchange-rate risk.
A. risk neutral B. covered C. speculative D. uncovered