Why are the public sector and private sectors “imperfect institutions”?
Please provide the best answer for the statement.
The private or market sector of the economy does not always allocate resources perfectly because of market failures or information problems. As discussed in this chapter, the public sector can be quite inefficient in performing its functions, because of voting problems, special-interest effects, rent-seeking, limited and bundled choices, bureaucracy, and political corruption, each of which contributes to government failure. Thus both the private and public sectors have their limitations or flaws from an efficiency perspective, and thus are imperfect institutions in efficiently allocating resources and providing goods and services.
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
The beginnings of the New York Stock Exchange can be traced back to a small group of men who bought and sold stock in New York in
A. 1792. B. 1866. C. 1892. D. 1929.
Firms tend to lower the price of their goods after acquiring a firm that sells a complementary good because
a. They gain market power b. There is an increase in the overall demand for their products c. The bundle has a more elastic demand than individual goods d. The bundle has a more inelastic demand than individual goods
Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?
a. $1 b. $19 c. $20 d. $21