What Is Regulatory Capture

question 170

Multiple Choice

What is regulatory capture?

• A)It is a situation in which a policymaker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign.
• B)It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents.
• C)It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest.
• D)It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest.

---

Definitions:

Credit

In finance, it refers to the borrowing capacity of an individual or company, or the entry on the right side of a financial account, indicating an increase in liability or decrease in asset.

Unadjusted Trial Balance

A report listing all the balances in each account in the ledger before any adjusting entries are made, used to check the equality of debits and credits.

Errors

Mistakes or inaccuracies found in financial statements or transactions.

Normal Balances

Refers to the expected debit or credit balance in a specific type of account, consistent with its accounting equation side.