Evaluate the benefits and cons of deregulating a governed industry
Please provide the best answer for the statement.
Deregulation of a governed industry may improve economic efficiency. Deregulation of an industry removes any regulatory capture that may be present, if the industry is unregulated there is no regulatory agency to capture. This only improves efficiency if, after the deregulation, the economy moves toward a more efficient point by becoming more competitive. The alternative could also happen, deregulation leads to a less competitive market. If a monopoly is created or a negative externalize is present, it may be more efficient for the industry to remain regulated, even if a regulatory capture is in place.
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The rational expectations hypothesis is a theory that states that
A) people make their economic plans by using all available past and present information and their understanding about how the economy operates. B) individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation. C) people make their economic plans in an irrational, intuitive manner. D) people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.
An economy that contains both perfect and imperfect competition and both regulated and non regulated industries is known as a
a. traditional economy. b. mixed economy. c. market economy. d. conglomerate economy.
In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?
A) The AS curve likely shifted to the left and output likely fell because of this adverse shock. B) In the short-run there was a movement out of general equilibrium leading to an increase in inflation as a likely result of this adverse shock. C) In the short-run there was a movement out of general equilibrium leading to an increase in unemployment as a likely result of this adverse shock. D) all of the above E) none of the above
In a public goods context, it is difficult to measure its impact on real income because
A. public goods are generally free to the public. B. they make up a small percentage of total GDP. C. people do not reveal how they value public goods. D. inflation decreases the value of the good.