A tradable allowance is:
A. the minimum amount set by the government that can be bought or sold in a market.
B. the permitted price for the trade of a particular good.
C. a production or consumption quota that can be bought or sold.
D. None of these statements is true.
Answer: C
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Since there are many special interests lobbying in favor of different tax changes but no special interests lobbying in favor of the public interest, this suggests that tax code changes will _____
a. lead towards more regressive taxation b. will favor special interests c. not be in the direction of efficiency d. b and c
If a federal budget deficit causes crowding out, _____
a. real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because the marginal propensity to consume decreases b. real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment decreases c. interest rates fall, reducing the burden of the debt d. firms become more willing to invest e. interest rates fall, so that decreases in investment and government purchases of goods and services exactly offset the expansionary effect of the deficit
The free rider problem causes less than optimal production of a public good.
A. True B. False C. Uncertain
If the quantity effect outweighs the price effect of a price increase, then demand is:
A. elastic. B. inelastic. C. normal. D. unit elastic.