A Pigouvian tax is a tax designed to ________
A) induce consumers of a good to reduce the consumption of the good
B) induce producers generating negative externalities to reduce production
C) induce producers generating positive externalities to reduce production
D) induce producers to stop the production of a good
B
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A currency drain ________ the amount of bank reserves available to banks to make loans because ________
A) reduces; people are holding more money outside of the banks B) increases; people are holding less money outside of the banks C) reduces; people are holding less money outside of the banks D) reduces the monetary base; people are holding more money outside of the banks E) reduces; people are holding onto the money the banks could have borrowed from the Fed
The marginal cost curve: a. is a vertical line
b. generally rises at first and then declines as output expands. c. generally falls at first and then rises as output expands. d. intersects the average variable cost curve from below at its maximum point.
If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good
a. True b. False Indicate whether the statement is true or false
The transactions demand for money is
a) positively related to aggregate income b) positively related to interest rate c) negatively related to the price level d) all of the above