Under a tradable pollution permits system (cap and trade), government _____________ the amount of pollution, ___________________ what the price to pollute will be.
A. knows; and polluters immediately know
B. doesn't know; and polluters don't immediately know
C. knows; but polluters don't immediately know
D. doesn't know; but polluters immediately know
Answer: C
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A constitutional amendment is passed that requires the government to have an annually balanced budget in the sense that changes in spending should be matched by equivalent changes in taxes. Should the government desire to increase real GDP by $25 billion and meet the provisions of the law, itÂ
A. could increase spending by $25 billion and reduce taxes by $25 billion. B. cannot possibly reach its objective without breaking the law. C. could increase spending by $30 billion and increase taxes by $25 billion. D. could increase spending by $25 billion and increase taxes by $25 billion.
If an individual's housing purchases are always a constant fraction of income, then the income elasticity of demand for housing is
a. greater than one. b. equal to one. c. less than one. d. Cannot be determined from the available information.
After the Fed makes an open market purchase of bonds, the deposit-creation process may continue only to the point where
a. the Fed reverses course and sells bonds b. the Fed changes the required reserve ratio c. all excess reserves have been converted into required reserves d. all required reserves have been converted into excess reserves e. the Fed raises interest rates
Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, and the price of a doughnut is 25 cents, then at this firm's profit maximizing level of output, the firm will earn an economic ________ of ________ per day.
A. loss; $80 B. loss; $10 C. profit; $80 D. profit; $8