Under what conditions might government intervention in a market economy improve the economy's performance?
If there is a market failure, such as an externality or monopoly, government regulation might improve the well-being of society by promoting efficiency. If the distribution of income or wealth is considered to be unfair by society, government intervention might achieve a more equal distribution of economic well-being.
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Policy making that is carried out in response to a rule is
A) restrictive policy making. B) passive policy making. C) determined policy making. D) active policy making.
If the market value of what it has lent is less than the market value of what it has borrowed, a financial institution's net worth is ________ and it is ________
A) negative; illiquid and insolvent B) positive; illiquid and insolvent C) negative; insolvent but not necessarily illiquid D) positive; insolvent but not necessarily illiquid E) negative; illiquid but not necessarily insolvent