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Author Question: What is government failure'? How would you draw the line between public and private activity? ... (Read 118 times)

cnetterville

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on: Jun 30, 2018
What is government failure'? How would you draw the line between public and private activity?
 
  What will be an ideal response?

Question 2

Suppose that the Federal Reserve issued bonds in the amount of 45 million and the reserve requirement was 10, what would be the resulting change to the money stock?
 
  A) 45 million
  B) 450 million
  C) 4.5 million
  D) The bond issuance would not impact the money stock only the monetary base.


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ciecieme

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Government failure is defined in the text. Students should address issues of efficiency and externalities, at least in drawing their line. Other concerns, such as fairness, may also be addressed, although students should be encouraged to distinguish between purely economic and other criteria.

Answer to Question 2

B


cnetterville

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Reply #2 on: Jun 30, 2018
Thank you :)


ciecieme

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Reply #3 on: Jun 30, 2018
Happy to help you


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