In a Free Market Economy

question 157

Multiple Choice

In a free market economy,

• A)problems with externalities can never be solved.
• B)public goods will be efficiently provided by the private sector.
• C)detrimental externalities are rare.
• D)externalities can be solved by policy makers using market methods.

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Definitions:

Progressive

A term describing a tax system where the tax rate increases as the taxable amount increases, or broadly referring to policies or principles aiming at promoting social advancement.

Regressive

A term often used in taxation that describes a situation where the tax rate decreases as the taxable amount increases, placing a heavier burden on lower-income individuals.

Transfer Payments

Transfer payments are the distributions of money by the government to individuals without the requirement of goods or services in return, such as welfare or social security.

Income Redistribution

A policy or mechanism aimed at transferring income from certain individuals or groups to others, often to reduce economic inequalities.