What are the five major reasons for government involvement in a market economy?
What will be an ideal response?
Provide the legal, monetary and social framework necessary for markets to operate. Insure that markets operate in a competitive manner. Redistribute income and wealth in a more desired (equitable) fashion. Guarantee a more efficient use of resources when there are benefit and cost externalities. Stabilize the overall level of economic activity to counteract undesirable levels of price inflation and unemployment.
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Court decisions aiming to resolve disputes by determining who in fact possesses contested legal rights
A) prevent any change from occurring. B) prevent undesirable changes from occurring. C) promote cooperation by clarifying and stabilizing expectations. D) substitute legal criteria for economic criteria and thereby create windfall profits and losses. E) substitute public-welfare criteria for private-interest criteria.
The concept of externalities means that subsidizing education can be justified on the grounds that as a student becomes better educated, the student will
A) earn a higher income. B) enhance the lives of people around the student. C) make contributions to the student's alma mater. D) none of the above
Scarcity and shortages differ in that
A) scarcity is caused by natural disasters and shortages are caused by mistakes people make. B) scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. C) scarcity is a type of shortage but shortage is a broader concept. D) shortages apply to resource markets while scarcity applies to product markets.
Suppose the price of one share of a particular stock rose from $10.15 to $12.05 over the course of a year, and the stock paid a dividend of $1.00 per share during the same year. What was the total return on the share of stock?
A. 8.9 percent B. 15.8 percent C. 28.6 percent D. 18.7 percent