Taxes can be used to internalize negative externalities.
Answer the following statement true (T) or false (F)
True
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Assuming that MPC is .75, equal increases in government spending and tax collections by $10 billion will
A. increase the equilibrium real GDP by $10 billion. B. reduce the equilibrium real GDP by $10 billion. C. increase the equilibrium real GDP by $2.5 billion. D. leave the equilibrium real GDP unchanged.
Dividends are paid by corporations out of _____ leading to _____
a. pre-tax income; dividends escaping taxation b. pre-tax income; the double taxation of saving c. after-tax income; dividends escaping taxation d. after-tax income; the double taxation of saving
A good or service that is rival but nonexcludable is called a ________, and a good or service that is nonrival but excludable is called a ________.
A. public good; collective good B. commons good; public good C. commons good; collective good D. public good; private good
A monetarist economist believes that
A) if the economy was left alone, it would rarely operate at full employment. B) the economy is self-regulating and always at full employment. C) the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. D) the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.