Which Type of the Market Failure Exists When the Effect

question 19

Multiple Choice

Which type of the market failure exists when the effect of one party's economic activities on another party is not taken into account by the price system?

• A)Imperfect information
• B)Externalities
• C)Public goods
• D)Imperfect competition

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Definitions:

M1

A segment of the money supply encompassing all tangible currency, such as bills and coins, in addition to demand deposits, checking accounts, and negotiable order of withdrawal (NOW) accounts.

Credit Cards

Credit cards are payment cards issued to users to enable the cardholder to pay a merchant for goods and services, based on the cardholder's promise to the card issuer to pay them for the amounts plus other agreed charges.

Checkable Deposits

Bank account balances that can be drawn upon by writing a check or using a debit card, functioning as money for everyday transactions.

Money Supply

The aggregate of cash and banking deposits that constitute the financial assets within an economy at a particular time.