QUESTION TEXT: In recent decades, government efforts to fight…
QUESTION TYPE: Paradox
PARADOX: The government is good at fighting counterfeiting and at removing counterfeits from circulation. Yet people who do have counterfeits are easily able to spend them.
ANALYSIS: If something is common, you’re more prepared for it. The fact that counterfeits are rare could be why merchants aren’t good at recognizing them.
If 20% of bills were counterfeit, merchants would surely check bills carefully. If only 0.02% of bills were counterfeit, merchants would be more likely to never check bills. And thus counterfeit bills could be spent. So merchants are failing to detect the counterfeit bills precisely because government has been successful in removing most of them.
- This makes the situation more confusing. If detection campaigns are successful, then why aren’t merchants detecting counterfeits.
- This explains why governments have been successful in reducing counterfeiting. But it doesn’t explain why merchants aren’t detecting those counterfeits that do exist.
- It doesn’t really matter what counterfeiters are aware of. We mainly care what merchants think, since they are the ones who decide to accept or decline counterfeit bills.
- CORRECT. This explains the situation. See the analysis above. If something is uncommon, you’re less likely to prepare for it.
- This may explain why the campaign to remove bills is successful. But it doesn’t explain why those bills still in circulation are able to be passed to merchants without detection.
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