One goal of rate-of-return regulation is the prevention of
A. free market entry.
B. environmental degradation.
C. positive economic profits.
D. poor quality service.
Answer: C
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If the government overcorrected in a situation of external costs a. More than the efficient amount of the good would end up being produced. b. Less than the efficient amount of the good would end up being produced. c. It would result in a welfare cost in that market
d. Both b and c are would result.
Stabilization policy often faces a trade-off between inflation and unemployment.
Answer the following statement true (T) or false (F)
Based on the graph showing how the subprime share of home mortgages grew rapidly before the big decline, at the peak of the use of subprime loans in 2005, the gap between the share of subprime mortgages and adjustable mortgage rates was ______ the typical historical difference.
a. perfectly in line with
b. slightly smaller than
c. slightly greater than
d. dramatically greater than
Equity should never be used to judge economic policy.
Answer the following statement true (T) or false (F)