When the production of a good creates an external cost, in order for taxes to be effective in achieving the efficient allocation of resources, the tax must be set equal to the
A) marginal private cost.
B) marginal external cost.
C) marginal social cost.
D) marginal benefit of polluting.
B
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________ are one source of involuntary unemployment during recessions
A) Downwardly rigid wages B) Lower corporate tax rates C) Flexible wages D) Higher income tax rates
The Fed was created
A) after financial panics in the late 1800s and early 1900s. B) after the stock market crash of 1929. C) to help finance government expenditures during World War II. D) to help channel funds to the residential mortgage market.
A competitive equilibrium
A) is always economically efficient. B) is efficient only if there is an externality. C) is economically efficient only given some special conditions. D) does not exist without government taxation.
Unlike business, government can coerce individuals to paying higher prices through taxes
Indicate whether the statement is true or false