In his classic treatise on public finance, Richard Musgrave says the economic activities of the state can be broken down into _____.
a. allocation, distribution, production
b. allocation, distribution, stabilization
c. allocation, production, protection
d. production, protection, allocation
Question 2
Which of the following is not a limitation of the Pareto criteria?
a. Almost any policy change will make at least one person worse off.
b. The status quo is lent legitimacy from being the starting point for evaluating social welfare.
c. The criteria cannot tell us if a particular policy change will make all participants better off.
d. The criteria do not allow for the ranking of all possible states of the world.