If It's Possible to Eliminate the Problems Created by Externalities,why

question 118

Multiple Choice

If it's possible to eliminate the problems created by externalities,why do they persist?

• A) It can be difficult to coordinate the millions of market participants.
• B) Creating a more efficient solution does not mean it will have a fair distribution of that surplus.
• C) They can be diffuse, complex, and hard to control.
• D) All of these statements are true.

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Definitions:

Import Quota

A cap placed by the government on how much or how valuable the items being imported into a nation can be.

Real Exchange Rate

The real exchange rate is a measure that adjusts the nominal exchange rate between two currencies to account for differences in price levels, reflecting the purchasing power of the currencies.

Real Interest Rate

The interest rate that has been adjusted for inflation, indicating the real cost of borrowing or the real yield on an investment.

Capital Flight

The large-scale exodus of financial assets and capital from a nation due to events such as political or economic instability, reducing the nation's investment capacity.