How do government bailouts increase moral hazard?

June 30, 2024 No Comments

A: Government bailouts increase moral hazard by engendering a business climate in which companies feel they will be protected from the consequences of poor decisions and risky behavior. Because they no longer fear these consequences – at least not to the level they should –

How did mass production affect the price of consumer goods?

June 30, 2024 No Comments

A: Before the advent of mass production, goods were usually manufactured on a made-to-order basis. Once mass production was developed and perfected, consumer goods could be made for the broadest possible market. Anything consumers needed or desired could be made in larger quantities. Mass production

How did mercantilism affect the colonies of Great Britain?

June 30, 2024 No Comments

A: England is small and contains relatively few natural resources. During Great Britain’s mercantilist period, the prevailing economic wisdom suggested that the empire’s many colonies could supply raw materials and resources to the mother country and subsequently be used as export markets for the finished products.

How did moral hazard contribute to the 2008 financial crisis?

June 30, 2024 No Comments

A: The financial crisis of 2008 was the result of numerous market inefficiencies, bad practices and a lack of transparency in the financial sector. Market participants were engaging in behavior that put the financial system on the brink of collapse. Historians will cite products such

How are aggregate demand and GDP related?

June 30, 2024 No Comments

A: According to Keynesian macroeconomic theory, gross domestic product (GDP) is a way to measure a nation’s production. Aggregate demand takes GDP and shows how it relates to price levels. Quantitatively, aggregate demand and GDP are exactly the same. A Keynesian economist might point out

How are capitalism and private property related?

June 30, 2024 No Comments

A: Private property rights are central to a capitalist economy, its execution and its legal defenses. Capitalism is built on the free exchange of goods and services between different parties, and nobody can rightfully trade property they do not own. Conversely, property rights provide a

How did the Soviet economic system affect consumer goods?

June 30, 2024 No Comments

A: The now-defunct Soviet Union was not a good place for its citizens, who suffered from chronic shortages of consumer goods. What goods were available to them were generally inferior to what was available in the West. During its nearly seven decades of existence from

How are earmarks and pork barrel spending related?

June 30, 2024 No Comments

Both earmarks and pork barrel spending involve spending money on certain projects or specific events. Projects paid for by earmarking are more likely to benefit a larger portion of the population. Pork barrel projects are more likely to benefit a smaller group, specifically because a

How did World War II impact European GDP?

June 30, 2024 No Comments

A: World War II brought about untold changes in Europe and elsewhere. This period marked a cultural and economic shift for the entire globe, and the recovery from that shift echoes to this day. Economically, the period after the end of World War II was

How are industrial goods different from consumer goods?

June 30, 2024 No Comments

A: Industrial goods are made up of machinery, manufacturing plants and materials, and any other good or component used by other industries or firms. Consumer goods are ready for the consumption and satisfaction of human wants, such as clothing or food. Consumer goods are not

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