Chapter 2, Problem 23AA

a)

To determine

U.S. economic goal met by the government regulation of the amount that an electric company can charge for energy.

Answer to Problem 23AA

The government regulation of the amount that an electric company can charge, meets the goal of economic stability.

Explanation of Solution

In case of, sudden change in price (income remains constant) purchasing power also changes and it leads to economic instability.By fixing the maximum limit on prices, government tries to stable the average price level and in turn the standard of living of people.

Economics Concept Introduction

Introduction:

Goal of economic stability : The goal of economic stability tries to reduce extreme ups and downs in the standard of living or the material well-being of people, group, and nation. The standard of living is measured by the average value of goods and services during a period of time.

b)

To determine

U.S. economic goal met by Juan movement to Seattle to work for a Web page designer.

Answer to Problem 23AA

Juan movement to Seattle to work for a Web page designer, meets the goal of economic freedom.

Explanation of Solution

He chooses to shift Seattle to work for a company of his choice without any government intervention. Hence, he has freedom to make his economic decisions.

Economics Concept Introduction

Introduction:

Goal of economic freedom : This goal allows people to make choices without government intervention. For instance, freedom to start own business, to move freely from one place to other in search of work etc.

c)

To determine

U.S. economic goal met by the decision to insure savings account of individuals up to $100,000.

Answer to Problem 23AA

By insuring saving accounts up to $100,000 government meets the goal of economic security.

Explanation of Solution

Sometimes banks fail and it leads to insecurity regarding banks in the minds of people. Insurance provides security and helps them recover either some parts or full part of their deposits.

Economics Concept Introduction

Introduction:

Goal of economic security : This goal gives protection against risks that are beyond individual’s control. Example of such risks are accidents on the workplace, business and bank failures and natural disasters etc. To meet this goal government gives either direct cash payment or insure people against such risks.