Loan Guarantees Provided by the Government for Specific Private-Sector Investments

question 69

Multiple Choice

Loan guarantees provided by the government for specific private-sector investments tend to

• A) generate high positive returns for the government.
• B) increase the financial risk faced by the private investors.
• C) attract private investors into the specific project.
• D) eliminate the moral hazard problem among investors.

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Definitions:

Utility Costs

Expenses incurred for essential services such as electricity, water, gas, and sewage.

Supervisory Salaries

Compensation paid to employees who oversee the work of other employees; it is considered a part of indirect labor costs in manufacturing settings.

Net Income

The total earnings of a company after subtracting all expenses, including taxes, interest, and operating expenses, from its total revenue.

Selling Price

The amount for which a product or service is sold to customers, determined by factors like cost, market demand, and competition.