Question

Which of the following are examples of inefficiencies created by government? intervention? ?(Check all that apply?.)

A. Quality deterioration in a market after government implements a price control.

B. Causing a rise in inflation due to an expansionary fiscal policy of the government.

C. Creating a large workforce of professionals who review whether the financial reports of companies are true and fair.

D. An increase in the price of alcohol due to higher taxes imposed by the government.

Which of the following is not a result of? corruption?

A. Using public funds for increasing personal wealth.

B. Inequality in the distribution of resources.

C. Using a lesser proportion of the total assigned amount of money for public projects.

D. Selling goods at a price that does not include taxes.

Answer 1

1.

Correct Answer:

A

B

When government fixes the price as a price control mechanism, then it negatively affects the quality. The expansionary fiscal policy, makes more money chasing few goods. So, these are the examples of inefficiencies in the market.

Government applies tax to alcohol to correct the negative externality. So, it is not the case of efficiency.

--------

2.

Correct Answer:

B

The issue of inequality is related to the policy planning by the government.