What are the advantages of a tax system for pollution control?
What will be an ideal response?
There are two main advantages of a tax system for pollution control. The first is an easier enforcement than a direct control system. Direct controls require a court system to enforce the standards through court order, injunctions, etc. Courts are often slow and burdened with other legal matters. Penalties may be too small to make much difference. By contrast, a tax system is as automatic for pollution control as it is for collecting other revenue. Therefore, it is very likely to generate revenue and lead to incentives to clean up to avoid payment.
The second advantage of a tax system is efficiency. Only polluters who can reduce emissions cheaply and efficiently can afford to take advantage of the “loophole”—the opportunity to avoid the tax by reducing emissions. The firms best able to clean up cheaply will know it and do so. The others will pay, but this will be cheaper overall than requiring them to clean up.
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The inflation rate is the
A) difference between the current period CPI and the base period CPI. B) percentage change in the composition of the CPI market basket from the base year to the next year. C) difference in the price level from one year to the next multiplied by 100. D) difference between the base period CPI and the current period CPI. E) percentage change in the CPI from one year to the next year.
Economists argue that unhindered international trade leads to an efficient outcome. What is meant by "an efficient outcome" in this context?
A) an outcome in which wages are roughly equal around the world B) an outcome in which the standard of living is roughly equal around the world C) an outcome in which an individual can choose to specialize in a certain line of work and be certain that he or she can make a living at that until retirement D) an outcome in which resources are devoted to their most efficient use
In a fixed exchange rate system, the center country, to whose currency the other countries peg their exchange rate, will:
A) find it difficult to conduct autonomous monetary policy. B) find it difficult to conduct autonomous fiscal policy. C) easily implement monetary and fiscal policy to suit its economy. D) defer to advice from other countries in conducting its domestic policy.
The recurrent ups and downs in the level of economic activity extending over several years are a description of a:
A. recession. B. business cycle. C. business trough. D. noncyclical fluctuation.