Which of the Following Is a Reason to Think That

question 258

Multiple Choice

Which of the following is a reason to think that government action may not be valuable to improve market outcomes with asymmetric information?

• A)The private market can sometimes deal with information asymmetries using signaling and screening.
• B)The government rarely has more information than the private parties.
• C)Government actions have their own imperfections.
• D)All of the above are correct.

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Definitions:

Taxable Gain

The profit that is subject to taxation, realized from the sale of assets or investments.

FMV

Fair Market Value; an estimate of the market value of an asset, based on what a willing buyer would pay to a willing seller.

Subchapter S Corporation

A type of corporation that meets specific Internal Revenue Code requirements, offering the benefits of limited liability of a corporation but is taxed as a pass-through entity.

Taxed

Subject to taxation by governmental authority, involving the imposition of financial charges on individual or corporate income, property, goods, services, or transactions.