Multiple Choice
Which of the following is a public policy that a government can implement to address negative externalities in a free-market economy?
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7. Externalities
Public Solutions to Externalities
Multiple Choice
Which of the following is a public policy action the government of country df can take to encourage citizens to purchase homes?
A
Provide subsidies or tax credits for homebuyers
B
Restrict access to mortgage loans
C
Increase property taxes on residential homes
D
Impose rent controls on rental properties
Verified step by step guidance1
Understand the concept of public policy actions aimed at encouraging homeownership. These actions typically involve making it financially easier or more attractive for citizens to buy homes.
Analyze each option to see if it incentivizes or discourages home buying: Subsidies or tax credits reduce the cost of purchasing a home, making it more affordable.
Restricting access to mortgage loans would make it harder to finance a home purchase, thus discouraging home buying.
Increasing property taxes on residential homes raises the ongoing cost of owning a home, which can deter potential buyers.
Imposing rent controls affects rental markets but does not directly encourage home buying; it may even reduce incentives to buy by making renting cheaper.
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