When the Government Chooses an Externality Policy That Aligns Private

question 148

Multiple Choice

When the government chooses an externality policy that aligns private incentives with social efficiency to solve an externality:

• A)it provides incentives to private decision makers to induce them to solve the externality problem on their own
• B)it typically uses command-and-control techniques
• C)the use of taxes is strictly forbidden
• D)subsidies are always the best policy

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Definitions:

Economic Growth

An increase in the output of goods and services in an economy over time, often measured as the percent rate of increase in real GDP.

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Mortgage Default

Occurs when a borrower fails to make required payments on their mortgage loan, risking foreclosure and loss of property.

Economic Crisis

A situation in which a country experiences a severe downturn in its economy, characterized by a significant decline in economic activity, high unemployment, and financial instability.