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In such a scenario, we will trade repeatedly at market clearing prices and would arrive at an efficient situation. However, in case one…
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Download file to see previous pages The federal government’s other transfers include Equalization and Territorial Formula Financing programs which help less prosperous provinces and territories. These provinces have comparable levels of taxation as other more prosperous provinces. Thus raising tax rates is not feasible.
5. The Great Depression was decade-long economic downturn that was witnessed by practically every country of the world. It is considered to be the deepest depression of the 20th century. The long contraction and agonizingly sluggish highlighted the need for an expanded role for government. Hence the Great Depression is linked to the growth of government in the developed world.
6. ‘If the prices are right, people will respond correctly’ indicates that if people feel the payment that they will shell out for a product or service brings in commensurate benefits to them and is thus of value to them, they will go ahead and buy that product or service. Thus right here means ‘fair’ and ‘correctly’ refers to the decision to buy.
7. Global warming refers to the constant warming up of the Earth’s atmosphere due to increase in the levels of the greenhouse gases. This increase in temperature has occurred as humans continue to use more and more fossil fuels in their day to day lives. While this usage helps in business and trade, there is a cost involved, cost that neither the buyer nor the seller bears, but we as a nation (for that matter, the World) collectively bear. Thus global warming or climate change can be termed as one of the biggest market failures as the market forces did not allocate scarce resources to generate the greatest social welfare.
Failure to adopt stringent emissions reduction targets, excessive deforestation, adoption of technology at the expense of the environment are all market failures relevant to the problem of global climate change and relate to the world-level policy failure regarding global warming. To correct the problem, the world has ...Download file to see next pagesRead More
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