Which of the Following Statements Concerning Benefit- Cost Analysis Is

question 14

Multiple Choice

Which of the following statements concerning benefit- cost analysis is true?

• A) Though benefits from a government policy can be accurately measured, costs are usually impossible to quantify.
• B) Large potential benefits, regardless of their time horizon, always justify government intervention.
• C) Benefit- cost analysis can be used effectively by private firms but should not be used in the public sector.
• D) Though it is often difficult to estimate costs and benefits with precision, benefit- cost analysis can be useful in determining whether to implement a given government policy.
• E) Large potential costs, regardless of their time horizon, always preclude government intervention.

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Definitions:

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Interest Rate

The percentage of a loan that incurs interest for the borrower, usually shown as an annual rate based on the remaining loan balance.

Current Dollars

A term referring to the nominal value of money at the present time, without adjusting for inflation or deflation.