Which of the Following Statements Is Correct

question 127

Multiple Choice

Which of the following statements is correct?

• A)Taxes are more difficult to administer than regulations.
• B)Taxes provide incentives for firms to adopt new methods to reduce negative externalities.
• C)Command-and-control policies provide incentives for private decisionmakers to solve their problems on their own.
• D)Corrective taxes distort incentives.

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Definitions:

Cost of Borrowing

The total amount of money that a borrower pays to secure a loan, including interest, fees, and any other charges.

Miller-Orr Model

A financial model that helps in managing cash flows and cash reserves of firms, focusing on maintaining an optimal balance level.

Interest Rate

The percentage charged on a loan or paid on deposits over a specific period, reflecting the cost of borrowing or the gain on savings.

Target Cash Balance

The ideal amount of cash that a company aims to hold to meet operational and transaction needs while minimizing holding costs.