Arrow's Impossibility Theorem Tells Us

question 65

Multiple Choice

Arrow's impossibility theorem tells us:

• A)no voting system can aggregate the preferences of voters of three or more options while meeting all of the criteria for an ideal system.
• B)most voting systems meet the criteria for an ideal system,yet politicians cannot seem to change the way in which elections are held.
• C)political pressures will always corrupt a voting system,making none ideal.
• D)None of these is true.

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Definitions:

Futures Contracts

Agreements for the future delivery of assets like commodities or securities at a price fixed upon the contract's signing.

Option Contracts

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date.

Swap Contracts

Financial agreements between two parties to exchange cash flows or other financial instruments for a specified period of time.

Put Option

A contract in finance that provides the bearer the privilege, but avoids the necessity, to dispense a specific measure of an underlying asset at a particular price during an outlined period.