The Coase Theorem States That

question 486

Multiple Choice

The Coase theorem states that

• A)under certain circumstances government intervention is not needed to reach efficient outcomes when an externality is present.
• B)government intervention is always required to reach an efficient outcome when an externality is present.
• C)government intervention cannot lead to an efficient outcome when an externality is present.
• D)only negative externalities can be resolved using government intervention.

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Definitions:

Current Accounts Deficit

A measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports.

Current Account Deficit

An evaluation of a nation's trade balance when the cost of its imports surpasses the value of its exports in goods and services.

Trade Deficits

Occur when a country's imports exceed its exports during a certain period, indicating an outflow of domestic currency to foreign markets.

Capital Account Balance

A measure within a country's balance of payments that records all transactions involving the acquisition or disposal of capital assets, such as securities and real estate, between residents and nonresidents.