Answer the following statement(s) true (T) or false (F)
1. In a deposit-refund system, the deposit makes the polluter internalize the externality by absorbing the cost of any damage it might generate in advance.
2. To effectively internalize the externality, the deposit component of a deposit-refund system must raise the MPC of illegal waste disposal by the MECmeasured at the competitive output level.
3. Suppose that Firm 1 and Firm 2 face marginal abatement costs of MAC1 = 2.5A1 and MAC2 = 1.5A2, respectively, and that tradeable permits for pollution are issued such that a total of 20 units must be abated. If firm 1 abates 7.5 units, and firm 2 abates 12.5 units, then both firms have an incentive to trade.
4. If Firm X is abating 9 units with an MACX = 0.6AX, and Firm Y is abating 11 units with an MACY = 0.9AY, then Firm Y should do less of the abating and Firm X should do more in order to lower the overall costs of abatement.
1. True
2. False
3. False
4. True
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As a result of the Fed's actions during the 2008 financial crisis and banks' lending policies, the money multiplier ________ as a direct result of the ________
A) fell from about 9 to about 4; low risk experienced by banks because of the FDIC increasing their default coverage amounts B) decreased drastically; consistent decrease in banks' desired reserve ratios as they took on less risk C) rose from about 4 to about 9; surge in banks' desired reserve ratios as they took on less risk D) rose drastically; consistent decrease in banks' desired reserve ratios as they took on less risk E) fell from about 9 to about 4; surge in banks' desired reserve ratios as they took on less risk
Labor-augmenting technological change refers to improvements in efficiency that
A) occur without increasing the productivity of labor or the efficiency of capital goods. B) increase the productivity of labor and the efficiency of capital goods. C) increase the efficiency of capital goods without having to increase the productivity of labor. D) increase the productivity of labor but that do not directly make capital goods more efficient.
Under perfect competition the price of a depletable resource whose cost of extraction is not changing must rise at
a. the same rate as the increase in GDP. b. the same rate as the increase in consumer prices. c. the same rate as the rate of interest. d. a rate higher than the increase in the rate of interest.
If the level of excess reserves in the banking system drops suddenly, we might expect that the:
A. required reserve ratio would fall. B. federal funds rate would rise. C. discount rate would rise. D. prime rate would fall.