The intent of the Sarbanes-Oxley Act was to
a. help companies be better able to deal with the ethical problems raised by increased technology
b. restore stakeholder confidence in the securities market after a series of scandals in the early 2000s
c. create a commission that would monitor the accounting records of major businesses
d. scare businesses into conforming with the GAAP standards in their accounting practices
Ans: b. restore stakeholder confidence in the securities market after a series of scandals in the early 2000s
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Vertical equity states that taxpayers with a greater ability to pay taxes should
a. contribute a decreasing proportion of each increment in income to taxes. b. contribute a larger amount than those with a lesser ability to pay. c. be less subject to administrative burdens of a tax. d. be less subject to tax distortions that lead to deadweight losses.
According to cost-benefit analysis, a government project should be undertaken as long as the
A. Voters approve the project. B. Opportunity costs exceed the welfare benefits. C. Benefits exceed the opportunity costs. D. Benefits equal the costs.
In practice, distribution under socialism is primarily determined by:
A. the ability of each individual to produce. B. individual altruism and cooperation. C. central planners within the government. D. market forces of supply and demand.
Consider a used car market in which half the cars are good and half are bad (lemons). Suppose the average price of a good car is $9,000 and the average price of a lemon is $3,000. If rational buyers are willing to pay $6,000 for a used car, then sellers
will agree to sell mostly lemons at this price. What is the term used to describe this situation? A) moral hazard B) adverse selection C) an efficient market D) economic irrationality