If the government wanted to ensure that the market reaches the socially optimal equilibrium in the presence of a technology spillover, it should
a. impose a corrective tax on any firm producing a technology spillover.
b. offer tax credits to consumers who are adversely affected by the new technology.
c. subsidize producers by an amount equal to the value of the technology spillover.
d. provide research grants to those firms not currently engaging in research to increase competition in the industry.
c
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If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $1000 billion, and excess reserves total $1 billion, then the excess reserves-checkable deposit ratio is
A) 0.01. B) 0.10. C) 0.001. D) 0.05.
The school of thought that emphasizes the possibility that an economy can be in equilibrium at less than full employment with inflation and argues that by managing aggregate demand, government can achieve the most acceptable combination of unemployment and inflation is the
a. Keynesian b. neo-Keynesian c. monetarist d. supply-side school e. rational expectations school
Exhibit 21-1 Production possibilities curves
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In Exhibit 21-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. Suppose Pada produces at point B on its PPC. How much corn is the country able to produce?
A. 2. B. 15. C. 10. D. 6.
An increase in aggregate demand is most likely to be caused by:
A. An increase in real interest rates B. A decrease in government spending C. A decrease in expected returns on investment D. A decrease in the tax rates on household income