Question

In markets both parties are better off when they engage in voluntary, non-fraudulent exchange. What is the role of government in promoting such exchange? A) There is no role for the government; the government only impedes exchange. B) The governments role is to create legislation to prevent fraud.

C) The role of government is to make sure all individuals are treated equally.
D) The governments role is to make sure sellers make a profit and stay in business.

Answer 1

Answer: B) The governments role is to create legislation to prevent fraud.

Explanation: In order for both parties to be better off, the exchange has to be honest; meaning each person knows what they are getting. In this sense , the governments role is to create legislation to prevent fraud. While the government cannot prevent all fraud, by making it illegal, it reduces fraud and thus promotes more voluntary exchanges.

Answer 2

The answer is: B) The Government's role is to create legislation to prevent fraud

It benefits both parties when they engage in a voluntary and non fraudulent exchange, that way both parties know what they're offering and receiving, following all the guidelines to prevent fraud.

However as is the case in many of these exchanges, not all of these parties follow the extent of the law and commit fraud to ease their operation or gain a large benefit in doing so, this is when the government has to step in and do what's in its power to prevent fraud, this results in legislation being passed to prevent such acts.