Economics (6th Edition)
Economics (6th Edition)
6th Edition
ISBN: 9780134105840
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 18, Problem 18.1.12PA
To determine

Whether there are significant ways in which the business marketplace differs from the political marketplace.

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Every modern society has a government of some sort, and every society has an economy as well. But how do the government and the economy intersect in society? That debate is prevalent in the United States today: how much influence should the government have on businesses, workers, and the economy? Some people say that the government should not have much influence on the economy—only the minimum necessary to ensure that society functions well. Others say that the government should ensure fair and equitable distribution of resources for all companies and workers. Still others say that the role of the government falls somewhere between those two extremes. You can start thinking about the intersection of government and the economy in the United States by considering your everyday life. From the time you get up in the morning until you go to bed at night, what contacts do you have with the government? Which of those contacts are related to the economy?
The trade-off between efficiency and equity is of great importance to economists. Why are economists so concerned about the impact of government policies and actions on efficiency and equity? Base your answer on economic theory.
Different Schools of thought propose theories to explain government failure. Based on public choice theory, briefly explain the foundations of government failure.
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