If the Government Wishes to Correct the Existence of Positive

question 145

Multiple Choice

If the government wishes to correct the existence of positive externality, it could

• A)grant subsidies to consumers to stimulate demand.
• B)impose a tax on the producers to stimulate supply.
• C)impose taxes on consumers to stimulate demand.
• D)grant subsidies to producers to reduce supply.

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Definitions:

Dependency Theory

A social science theory proposing that economic development in a global context is structured by the exploitation and dependency relationships between wealthy, developed countries and poorer, underdeveloped nations.

Foreign Investment

The investment by individuals, businesses, or governments in assets or enterprises within a foreign country to gain a return.

Sociological Theory

A set of ideas that provides an explanation for human society, analyzing the patterns and structures that shape social behavior.

Military Intervention

The act of a country sending its military into another country for the purpose of ending conflict, establishing control, or protecting interests.