Governments Can Use Subsidies

question 243

Multiple Choice

Governments can use subsidies

• A) as a means of increasing government spending.
• B) when they want to increase taxes.
• C) to achieve an efficient outcome if there are external costs.
• D) to achieve an efficient outcome if there are external benefits.

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Definitions:

TARP Funds

Stands for Troubled Asset Relief Program, a program of the U.S. government to purchase toxic assets and equity from financial institutions to strengthen its financial sector during the 2008 financial crisis.

U.S. Treasury

The department of the federal government responsible for managing government revenue, issuing currency, administering public debt, and overseeing fiscal policy.

Mid-2010

A reference to the middle part of the year 2010, often used in economic and demographic analyses.

Deposit Expansion Multiplier

A ratio that indicates the potential increase in money supply through the banking system's ability to lend more based on reserves.