"Creating a free market for carbon-dioxide emission permits would only encourage firms to pollute more." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. In a market of carbon-dioxide permits, firms that exceed their pollution limits must buy permits from firms that emit less than their limits. If an increase number of firms pollute more than their limits, then the market clearing price of the permits will increase. A higher price of the permits will induce firms to reduce their emissions.
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The substitution effect indicates that higher real interest rates ________ current consumption for households who are lenders and ________ current consumption for households who are borrowers
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Macroeconomic forecasting is made more difficult due to the fact that
A) deviations from trend in real GDP are persistent. B) turning points are hard to predict. C) there is no regularity in comovements. D) consumption is smooth.
A positive rate of time preference means that
a. time is relative to consumption b. consumption in the future is more important than consumption today c. consumption today is valued less than consumption in the future d. consumption in the future is valued less than consumption today e. consumption in the future and consumption today are positively related
Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have
a. a per person budget surplus of $2,109. b. a per person budget deficit of $2,109. c. horizontal equity. d. vertical equity.