When faced with a market failure, the government:
A. often encourages the well-functioning firms to stay through protectionist policy.
B. usually tries to redistribute the existing surplus more fairly.
C. generally enacts thoughtful policy in order to create market efficiency.
D. always takes over the market.
Answer: C
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Refer to Figure 15-9. What is the economically efficient output level?
A) 600 units B) 800 units C) 940 units D) 1160 units
What is Y - S equal to?
A) I B) C - T C) I + G D) C
If labor contracts prevent wage flexibility, the aggregate supply curve will be
A) vertical. B) horizontal. C) negatively sloped. D) positively sloped.
Other things being constant, countries with higher rates of saving
a. will have smaller GDPs than countries with lower rates of saving. b. will have higher rates of investment, but slower growth. c. will have higher rates of investment and growth. d. will be operating at less than full employment and potential output.