Explain the terms "paternalism" and "consumer sovereignty."
What will be an ideal response?
Consumer sovereignty is the view that choices made by a consumer reflect his or her true preferences, and outsiders, including the government, should not interfere with these choices, even if there is evidence that these choices might ultimately have negative consequences for the consumer. Paternalism is the view that consumers do not always know what is best for them, and the government should encourage or induce them to change their actions.
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Assume the government was to levy a tax of $100 per person on every individual in the country. Would this tax be characterized as proportional, progressive or regressive? Make sure to explain your reasoning
What will be an ideal response?
According to the second monetarist proposition, which of the following factors do not determine the level of real output in the long run?
a. The stock of capital goods b. The size of the labor force c. The quality of the labor force d. The state of technology e. The quantity of money