In General,an Externality Is Created When

question 118

Multiple Choice

In general,an externality is created when

• A) people are affected (other than by price) by a transaction which they were not part of.
• B) firms produce a product of low quality and consumers don't like it.
• C) firms have to pay for polluting the environment.
• D) the government subsidizes education.

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Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a predetermined call price.

Redeemed

Refers to the repayment or buyback of securities, such as bonds or preferred stocks, before their maturity.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy.

Bondholders

Individuals or entities that hold the debt securities issued by corporations or governments, entitling them to receive a specified amount of interest and repayment of the principal.