A market transaction causes an externality if someone
A. directly involved in the transaction receives uncompensated benefits or costs from it.
B. not directly involved in the transaction receives uncompensated benefits or costs from it.
C. directly involved in the transaction seeks legal assistance to ensure that the transaction is carried out.
D. not directly involved in the transaction interferes in it by imposing regulations or product standards.
Answer: B
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A basic problem with the infant-industry argument is that
a. most industries need protection when they are mature, not when they are first established. b. the amount of the tariff is unlikely to have much impact on the success of an infant industry. c. political pressure will likely prevent the withdrawal of the tariff when the industry matures. d. domestic consumers will continue to buy the foreign products anyway, regardless of the tariff.
Discuss in detail the three things mentioned in the text that the Federal Reserve did to deal with the 2007-2009 financial crisis