If You Are a Government Official, Under Which of the Following

question 243

Multiple Choice

If you are a government official, under which of the following situations would you opt for a command and control solution to an externality problem?
I. Lack of running water in part of the country is exacerbating the spread of cholera in the population.
II. Foreign ships are dumping toxic wastes in the waters off your country's shores.
III. A large number of banks fail due to excessive risk taking.

• A) I only
• B) I and II only
• C) II and III only
• D) I, II, and III

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Definitions:

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuer's equity shares at certain times during the bond's life, usually at the discretion of the bondholder.

Carrying Value

The book value of assets and liabilities on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Equity Accounts

Equity accounts represent the owner's value in a business, reflected through transactions like contributed capital and retained earnings.

Sinking Fund Bonds

Bonds that include a provision requiring the issuer to set aside funds regularly to repay the bond at maturity.