The use of chlorofluorocarbons in refrigerators and air conditioners is alleged to cause the destruction of the ozone layer that surrounds the earth and which protects humans from ultraviolet radiation. Output of this substance has been restricted by a licensing system where producers have to bid in the open market for licenses to produce them in specified quantities. This is an example of
dealing with externalities by
a. voluntary compliance.
b. direct controls.
c. taxes.
d. the market mechanism.
d
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A risk-averse person's expected utility function is
A) decreasing. B) convex. C) concave. D) a straight line.
An indirect cost of government debt is:
A. it can distort the credit market and slow economic growth. B. it can cause hyperinflation. C. it can cause unemployment below the natural rate. D. All of these are true.
Which of the following actions can prevent migration of individuals from one health insurance policy to another?
a. Lowering the opportunity costs of switching from one policy to another. b. Fixing a uniform premium rate for all individuals under one type of policy. c. Conducting an interview of the people before placing them under different policies. d. Setting up a norm requiring all individuals to purchase the same coverage.
Fiscal policy
A. uses the same means as monetary policy to attain the same goals. B. is carried out by the Congress only. C. can be discretionary or automatic. D. uses the same means as monetary policy to accomplish an entirely different set of goals.