When the Government Reverts to Command-And-Control Policy to Solve an Externality

question 113

Multiple Choice

When the government reverts to command-and-control policy to solve an externality, it:

• A)is usually the most effective policy option available
• B)creates policies that directly regulate behaviour
• C)usually involves taxing consumption of a commodity
• D)typically refers to the Coase theorem to structure the policy

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Definitions:

Rate of Return

The gain or loss made on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Stream of Benefits

A sequence of potential advantages or profits that may be gained from an investment over time.

Compounded Quarterly

An interest calculation method where the interest is added to the principal amount four times a year, leading to interest earned on previously earned interest.

Certificates of Deposit

Financial products offered by banks that provide a fixed interest rate in exchange for keeping a deposit untouched for a predetermined period.