What is the relationship between market failure and government failure?
What will be an ideal response?
Market failure is a case where the market fails to provide the economically optimal outcome. Government failure is a case where the government fails to provide the economically optimal outcome. It is not necessarily the case that governments can always fix market failure.
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The table above gives data for the nation of Mosh. If we graphed these data, we would see that when GDP equals
A) $10 trillion, the AE curve intersects the 45° line. B) $9 trillion, the AE curve intersects the 45° line. C) $6 trillion, the AE curve is below the 45° line. D) $10 trillion, the 45° line is above the AE curve. E) $4 trillion, the AE curve intersects the 45° line.
When a freely functioning market is in disequilibrium:
a. the government must set a price ceiling. b. the government must set a price floor. c. the price and quantities demanded and/or supplied change until equilibrium is established. d. it will continue to remain in disequilibrium. e. it will reach equilibrium at a very high/low price.
What will be the outcome of a government law requiring employers with more than 100 employees to incur additional employee-related costs?
a. raise the cyclical rate of unemployment b. lower the cyclical rate of unemployment c. raise the natural rate of unemployment d. lower the natural rate of unemployment
Suppose that, since the base year, all prices have risen by 100%. This year's current-dollar GDP is $2,000 billion. Then constant-dollar GDP is
A. $4,000 billion. B. $3,000 billion. C. $2,000 billion. D.$1,000 billion. E. $500 billion.