What are market failures? Discuss examples of market failures. What can government do to improve the results of market failures?
What will be an ideal response?
Market failures are undesirable social results associated with free market outcomes. They include the growth of monopoly power, the presence of externalities, a lack of public goods and services, and an inequitable distribution of income. Government can intervene by enforcing anti-trust, tax or subsidize externalities, provide for public goods and redistribute income to correct for market failures.??
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The price of ________ in terms of ________ is referred to as the real exchange rate
A) foreign goods; foreign services B) domestic goods; the domestic currency C) domestic goods; foreign goods D) domestic goods; domestic services
What is "adverse selection"?
What will be an ideal response?
One HEADLINE article in the text suggests that most Americans do not trust the federal government to do the right thing. If they are correct, then government intervention results in:
A.) A decrease in opportunity costs. B.) A less desirable mix of output. C.) Market failure. D.) Less unemployment.
In an inflationary atmosphere that everyone anticipates will persist, lenders will
A) desire a lower nominal interest rate to increase the real rate. B) desire a higher nominal interest rate to protect against the inflation. C) tend to see the real rate of interest increase, particularly if the inflation is unforeseen. D) have the real rate of interest guaranteed by the Federal Reserve Board.