Question

State government approves a series of grants to fund job training. Which of the following is a negative externality? (5 points

Businesses would not necessarily increase hiring rates.
Economic recession would result in a backlog of applicants.
Money for conservation efforts would be eliminated.
The state would have to provide child care for parents in training.

Answer 1

None of the options listed is a negative externality. A negative externality is an unintended consequence of an economic activity that affects a third party who is not directly involved in the activity.

If I were to choose: Businesses would not necessarily increase hiring rates.

This could be considered a negative externality because the grant funding is intended to fund job training in order to increase employment opportunities, but if businesses do not increase their hiring rates despite having a pool of trained workers, then the intended benefit of the grant may not be fully realized. This could result in a loss of resources and a missed opportunity to address unemployment in the community.