Question

1. Some argue that Sweden's generous welfare benefits, which pay people who lose their jobs as much as 80 percent of previous incomes for three years, has resulted in too-high unemployment. This can be seen as an example of:

a. government not correcting externalities produced by the market.

b. government failure in fostering a competitive market environment.

c. market failure due to unfair conditions produced by the labor market.

d. globalization causing hardworking youth to emigrate.

2. A primary goal of the International Monetary Fund (IMF) is to:

a. promote economic negotiations and cooperation among industrialized countries.

b. work out repayment plans for developing countries with large international debts.

c. negotiate trade agreements between nations.

d. protect the interests of the United States abroad.

Answer 1

1) Option B. This is perhaps because when unemployment benefits are high there is little incentive to work or to find a job. Hence competition in the labor market is reduced. This is a failure on the part of the goverment that prevents market to be competitive

2) Option B. The IMF imposes certain conditions as a part of its lending, to require the government of the crisis country to initiate policy changes that should speed up the end of the financial crisis. These are policy reforms