When a Policy Succeeds in Giving Buyers and Sellers in a Market

question 61

Multiple Choice

When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to

• A)equalize private value and private cost.
• B)equalize private cost and external cost.
• C)externalize the actions of the buyers and sellers.
• D)internalize the externality.

Differentiate between various types of psychological tests.

Comprehend the principles of test development, including validity.

Recognize the stability and predictive power of IQ scores over time.

Identify the factors influencing intelligence and creativity.

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Definitions:

Closed Economy

An economic system that does not interact with other economies in terms of trade, investment, or migration, relying entirely on its own resources.

Certificate of Indebtedness

A type of financial instrument indicating the holder is owed a debt by the issuer, typically with terms specifying the repayment of the principal and interest.

Bonds

Debt securities issued by entities such as governments or corporations to raise capital, promising to repay the principal along with interest at a future date.

Private Saving

The portion of households' income that is not consumed or paid in taxes, and is instead saved.