Market Failure Occurs When

question 332

Multiple Choice

Market failure occurs when

• A) the price system fails to generate an efficient allocation of resources.
• B) the price system fails to generate an equal distribution of income.
• C) the price system fails to generate an equal distribution of wealth.
• D) the price system allows consumers to make their own decisions.

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Definitions:

Fiscal Policy

Government policies related to taxation and spending aimed at influencing a country's economy.

Money Supply

The sum of financial resources accessible within an economy at a given moment, encompassing cash, coins, and amounts present in both checking and savings accounts.

Government Purchases

Expenditures made by the government for goods and services that directly satisfy the needs of the community or help in the production of further goods.

Taxes

Mandatory monetary fees or different forms of charges levied on taxpayers by government entities with the purpose of financing government operations and a range of public spending.