An inherent weakness of ________ is the absence of the profit incentive.

Question

Quizplus · Accepted Answer

Government-directed credit lacks the profit incentive because the government's primary goal is not to generate profits. In order to allocate credit effectively and efficiently, lenders need to make informed decisions based on sound economic principles. The absence of profit incentives means that decisions regarding credit allocation may not be based on economic principles and could be subject to political influence. This can result in inefficient allocation of resources, ultimately affecting economic growth and stability.

An Inherent Weakness of ________ Is the Absence of the Profit