What Happens When the Government Attempts to Cut the Economic

question 45

Multiple Choice

What happens when the government attempts to cut the economic pie into more equal slices?

• A) It is easier to cut the pie, and therefore the economy can produce a larger pie.
• B) The government can more easily allocate the pie to those most in need.
• C) The pie gets smaller, and there will be less pie for everyone.
• D) The economy will spend too much time cutting the pie and lose the ability to produce enough pie for everyone.

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Definitions:

Synergy

The increased effectiveness that results when two or more entities work together compared to working separately.

Lockup Agreement

The part of the underwriting contract that specifies how long insiders must wait after an IPO before they can sell stock.

Economies of Scale

Cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

White Knight

A corporation or individual that acquires a corporation on the verge of being taken over by forces deemed undesirable by the company's board or management.