Some environmentalists have criticized tradable emission allowances on the grounds that they give permit holders a license to pollute
Furthermore, environmentalists argue that those who sell their permits receive a monetary benefit from their contribution to polluting the environment. Use economic reasoning to evaluate this criticism.
The criticism ignores one of the central lessons of economics: resources are scarce and trade-offs exist. Resources spent reducing one type of pollution are not available for other uses. Furthermore, the opportunity cost of polluting (using the permit) is the price of the permit. In other words, firms are forced to face the cost of polluting. So although firms receive a monetary benefit from the sale of permits, the scheme gives them the incentive to find the cheapest way to reduce pollution.
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A two-tier gold market like the one created during the Bretton Woods System refers to
A) a private tier for private gold traders where the price would not be allowed to fluctuate, and an official tier for central banks where the official gold price would be allowed to fluctuate. B) a private tier for private gold traders where the price would not be allowed to fluctuate, and an official tier for central banks where the official gold price would rise on a yearly basis by pre-determined increments. C) a private tier for private gold traders where the price would be allowed to fluctuate, and an official tier for central banks where the official gold price would be set at $35 an ounce. D) a private tier for private gold traders where the price would be set at $35 an ounce, and an official tier for central banks where the official gold price would be allowed to fluctuate. E) a private tier for private gold traders where the price of gold would rise on a yearly basis by pre-determined increments, and an official tier for central banks where the official gold price would be set at $35 an ounce.
The new classical explanation of aggregate supply is also known as
A) Monetarism. B) Keynesianism. C) the misperception theory. D) the adaptive expectations theory.
In an economy with a fixed exchange rate, an increased demand for foreign goods would increase the supply of local currency, and the government would have to buy:
A. foreign currency in the foreign exchange market to prevent the domestic currency from depreciating. B. local currency in the foreign-exchange market to prevent the currency from depreciating. C. local currency in the foreign-exchange market to prevent the currency from appreciating. D. foreign currency in the foreign exchange market to prevent the domestic currency from appreciating.
The percentage of consumer income spent on durable goods, nondurable goods and services have changed between 1955 and 2007 as follows:
A. Percentage spent on services has declined. B. Percentage spent on durable goods has increased. C. Percentage spent on nondurable goods and durable goods has decreased. D. Percent spent on durable goods and services has increased.