What is government failure'? How would you draw the line between ...

[cnetterville]

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.

[ciecieme]

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]

Thank you

[ciecieme]

Happy to help you