Does the economy work well on its own or does it require active government intervention? Does government intervention do more harm than good? Lastly, if people expect goverment to intervene when the economy falters, does this expectation affect people's behavior?

People of a non-democratic government would like to change their regime to get rid of non-democratic rulers and replace them by a democracy. Suppose the people’s utility from the non-democratic regime is 0 and their utility from the democratic regime is Dp > 0. However, they may get the democratic regime by revolting. If they revolt, they have to pay a cost of revolution Rp, where Dp > Rp > 0. Note they pay this cost whenever they revolt. The non-democratic leader has (i) a utility of N` if there is both no democratization and no revolution and (ii) a utility of D` if there is democratization and no revolution. Here N` > D` > 0. However, if there is a revolution, the non-democratic leader has a utility of 0 if they insist on no democratization and a utility of D` − C` > 0 if they give into democratization. Suppose the leader can take an action that limits their power in a non-democracy. By taking this action, their utility from no democratization under no revolution…

Which of the below statements does NOT fit in with the ideas expressed by Charles Wheelan in chapter 3  about the "Government and the Economy" of Naked Economics? Group of answer choices The private sector is the engine of growth, but it is the government that roots out fraud, makes transactions and contracts binding, sorts out property rights, and settles disputes.   The more sophisticated our economy becomes the more sophisticated our government institutions need to be.   Taxpayers know better what to do with their money than the government does.

A dangerous habit among those who own cell phones is driving while talking or texting. Although a great deal has been done to inform drivers of the risks of doing multiple tasks while driving, this informational campaign has been ineffective in the face of increased ownership of cell phones. If you were a policymaker, what types of negative incentives would you suggest to discourage individuals from driving and talking or texting at the same time?

Hayek suggests the best solution to society's problem is central planning. True or False

How does the historical institutionalist approach of political economy differ from rational choice approaches?

Give both unsavers