The Coase Theorem Asserts That Private Economic Actors Can Solve

question 30

True/False

The Coase theorem asserts that private economic actors can solve the problem of externalities among themselves, without government intervention, regardless of whether those actors incur significant costs in reaching and enforcing an agreement.

---

Definitions:

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves a bank must hold against deposits, a tool for monetary policy.

Overnight Loans

Short-term loans that banks borrow from each other to meet reserve requirements, which must be repaid within one business day.

Municipal Bonds

Tax-exempt bonds issued by state and local governments. General obligation bonds are backed by the general taxing power of the issuer. Revenue bonds are backed by the proceeds from the project or agency they are issued to finance.

Debt Obligation

A commitment to repay borrowed money, typically in the form of loans or bonds, with specific terms and interest rates.