Question

A goal of financial regulatory agencies is to

Answer 1

The correct answer is A) prevent monopolies.

Financial regulatory agencies focus on preventing monopolies because monopolies can be negative in a capitalist economy.

A monopoly is when one company has almost complete control over one specific market. For example, John D. Rockefeller was considered a monopoly by many people as his company Standard Oil controlled roughly 90% of all oil created in the US during the late 19th century. This type of control by one company can have a negative effect on the consumers. This is due to the fact that the monopoly has very little competition. Since there are few (if any) companies that can compete with the monopoly, the company that has cornered the market may have the chance to raise prices as high as they want. This is due to the fact that there is no other source to get this good from. This is why the government regulates the development of monopolies.

Answer 2

A is the most suitable answer.