Economists Generally Agree That Government Intervention in the Economy Is

question 121

Multiple Choice

Economists generally agree that government intervention in the economy is appropriate

• A)whenever there is a market failure.
• B)whenever the costs of market failure are greater than the benefits of the existence of markets.
• C)whenever the benefits of the correction of the market failure through intervention are greater than the costs of the intervention itself.
• D)only when the market fails to provide a socially useful good.
• E)whenever the costs of the intervention are greater than the value of the correction of the market failure.

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Definitions:

Yield Curve

A graph that shows the relationship between the interest rates and the maturity dates of debt securities issued by the same issuer.

Liquidity Premiums

Additional yield that investors require to hold securities with lower liquidity, compensating them for the higher cost and difficulty of trading such securities.

Future Expected Short Rates

The anticipated interest rates for short-term debt instruments in the future, important for forecasting and investment strategies.

Forward Rate

An agreed-upon interest rate for a financial transaction that will occur in the future, used in forward contracts and rate agreements.