In View of the Possible Need for Government Action in Markets

question 12

Multiple Choice

In view of the possible need for government action in markets where asymmetric information is a problem,which consideration is most valid

• A)The government almost always has more information than the private parties.
• B)Private markets have no means of dealing with information asymmetries on their own.
• C)The government is itself an imperfect institution.
• D)Government intervention will exacerbate any market failures.

---

Definitions:

Normal Balance

The side of an account (debit or credit) on which increases to the account are recorded, determined by the account type.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity over a period of time.

Permanent/Temporary

Categories of accounts in accounting where permanent accounts appear on the balance sheet and temporary accounts are closed at year's end, affecting income summary.

Normal Balance

The side (debit or credit) of an account that is increased, indicating the typical balance of that account in accordance with the double-entry bookkeeping system.