To correct for the social impact of pollution, the government should levy a per-unit tax
A) that is the same for all polluters regardless of their locations or sizes.
B) according to the economic damage of the pollution.
C) according to the business activity of the polluter.
D) only to those polluters that can afford to pay for the tax.
Answer: B
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In a large open economy, an increase in ________ leads to ________
A) desired saving; an increase in the domestic interest rate B) desired investment; an decrease in the domestic interest rate C) desired saving; an increase in desired investment D) desired saving; a decrease in actual investment E) none of the above
Use the information in Scenario 4.2. Suppose that the price of artichokes is increased slightly from $10. The total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________
A) rise, rise B) rise, fall C) fall, rise D) fall, fall
Which of the following is an example of crowding out?
a. An increase in government spending increases interest rates, causing investment to fall. b. A decrease in private savings increases interest rates, causing investment to fall. c. A decrease in the money supply increases interest rates, causing investment to fall. d. An increase in taxes increases interest rates, causing investment to fall.
The structural deficit:
A. does not change when actual income changes; it but changes only when potential income changes. B. falls as the economy expands and rises when it contracts. C. rises as the economy expands and falls when it contracts. D. changes as actual income changes regardless of potential income.