Which of the Following Is True of Regulation

question 114

Multiple Choice

Which of the following is true of regulation?

• A) Regulatory agencies often ignore the secondary effects of their actions and fail to foresee future problems.
• B) Policy-makers are hesitant to call for new regulations even when it is clear they would help avert future crises.
• C) Mortgage lending and banking have historically been unregulated and therefore regulation in these sectors will be unpopular.
• D) Past regulations have been effective at averting crises, but they are unpopular because they reduce the profitability of the regulated industry.

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of the good that producers are willing and able to sell, usually upward sloping.

Budget Proportion

The allocation of financial resources among various categories or items in a budget.

Necessity

A good or service that is essential for living and is deemed indispensable.

Few Substitutes

A market condition where there are limited alternative products or services available to consumers, often leading to higher prices.