Describe how a pollution-control authority might use an emissions permits system to reduce pollution.
What will be an ideal response?
An authority could create a permit for a specified quantity of a specific pollutant, such as a ton of sulfur dioxide of air pollution or a pound of sewage entering the water. The permits could be offered for sale in limited quantities fixed by the authority at prices set by supply and demand. (Supply is totally inelastic in this market.) The permits can be auctioned off to the highest bidder. Polluters have the choice to buy a permit or clean up and do without. It is a price-based approach, which tends to be efficient. It has the further advantage of reducing pollution to a known, specific amount based on the number of permits. It has the disadvantage of being viewed as a “license to pollute” and may be unpopular with the public.
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A study attempts to investigate the role of the various determinants of regional Canadian unemployment rates in order to get a better picture of Canadian aggregate unemployment rate behavior
The annual data (1967-1991) is for five regions (Atlantic region, Quebec, Ontario, Prairies, and British Columbia), and four age-gender groups (female and male, adult and young). Focusing on young females, the authors find significant effects for the following variables: the regional relative minimum wage rate (minimum wages divided by average hourly earnings), the regional share of youth in the labor force, the regional share of adult females in the labor force, United States activity shocks (deviations of United States GDP from trend), an indicator of the degree of monetary tightness in Canada, regional union density, and a regional index of unemployment insurance generosity. Explain why the authors only used region fixed effects. How would their specification have to change if they also employed time fixed effects? What will be an ideal response?
The following estimation methods should not be used to test for randomization when Xi, is binary:
A) linear probability model (OLS) with homoskedasticity-only standard errors. B) probit. C) logit. D) linear probability model (OLS) with heteroskedasticity-robust standard errors.
Which of the following is true of labor force participation rates in the United States since the 1950s? a. The rates for both men and women have risen
b. The rate for women has fallen; the rate for men has risen. c. The rate for men has fallen; the rate for women has increased. d. The rates for both men and women have fallen. e. The rates for both men and women have remained fairly constant.
If an increase in investment leads to a bigger increase in national income this is called the:
a) Accelerator b) Aggregate demand c) Monetarism d) Multiplier