Question

Which of these are goals of financial regulation? Check all that apply.

1-preventing monopolies
2-allowing businesses to avoid disclosing financial information
3-ensuring that businesses accurately report their earnings
4-keeping prices fair
5-removing competition from the market

Answer 1

The correct questions are:

1) Financial regulation stimulates competition practices and prohibits the creation of monopolies, except when authorized by the government.

3) The regulatory apparatus forces companies to follow best accounting practices and encourages transparency. This reduces cases of corruption and tax evasion.

4) Regulation stimulates competition between firms. In a competitive market firms the vector of competition among firms is the price. This stimulus to competition is good for the market and for the consumer. Efficient firms charge a lower price, benefiting the consumer. Inefficient firms are eliminated from the market.

Answer 2

1. preventing monopolies

3. ensuring that businesses accurately report their earnings

4. keeping prices fair

Step-by-step explanation

Financial regulation is a form of supervision carried out by governments and institutions that establish laws and rules of what financial institutions (such as banks and investment companies) can do. The main goal of financial regulation is to protect and maintain financial stability by preventing monopolies, ensuring that businesses accurately report their earnings and keeping prices fair.