In order to bring a market to its efficient outcome when a negative externality is present, the government could:
A. limit total consumption to the efficient quantity.
B. tax the parties involved in the market the value of the external cost.
C. limit the price to the efficient level.
D. Any of these would bring the market to its efficient level.
B. tax the parties involved in the market the value of the external cost.
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Fiat money refers to a monetary system in which gold backs up paper money
Indicate whether the statement is true or false
An increase in supply will have what effect on equilibrium price and quantity?
A. Price will increase; quantity will decrease. B. Price will decrease; quantity will increase. C. Both price and quantity will increase. D. Both price and quantity will decrease.
Candy makers accurately anticipate the increase in demand for candy for Halloween so that the supply of candy and demand for candy increase the same amount. As a result, the price of candy ________ and the quantity of candy ________
A) rises; does not change B) falls; increases C) does not change; increases D) does not change; does not change E) rises; increases
If the economy is experiencing an inflationary gap and the government wants to accelerate the adjustment to the long-run equilibrium, it should
A) reduce aggregate demand by cutting government spending or raising taxes. B) reduce aggregate demand by increasing government spending or cutting taxes. C) increase aggregate supply by cutting government spending or raising taxes. D) increase aggregate supply by increasing government spending or lowering taxes.