What is one reason private solutions to externalities do NOT always work?
a) Government participation in such solutions complicates the process.
b) Some parties benefit from externalities.
c) Interested parties incur costs in the bargaining process.
d) The actual costs and benefits of the problem are difficult to see.
Answer: c) Interested parties incur costs in the bargaining process.
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A customs union is an organization of nations whose members:
a. have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers. b. have no trade barriers among themselves but impose common trade barriers on nonmembers. c. have no trade barriers among themselves but each member country chooses its own trade policies with nonmember countries. d. retaliate each other by raising reciprocal tariffs and calling for fair trade. e. neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
The federal budget deficit: a. becomes less prominent during and after each recession
b. forces the government to issue Treasury bonds. c. decreases the growth rate of the U.S. GDP. d. is common when total federal revenue exceeds total federal outlay.