All externalities impose a cost on others
a. True
b. False
Indicate whether the statement is true or false
False
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In the income-expenditure model, at equilibrium GDP
a. either unemployment or inflation may occur. b. inflation can occur but unemployment cannot. c. unemployment can occur but inflation cannot. d. both unemployment and inflation are impossible.
In a closed economy, if taxes fall and consumption rises, then private saving must fall
a. True b. False Indicate whether the statement is true or false
Assume, for Mexico, that the domestic price of beets without international trade is higher than the world price of beets. This suggests that, in the production of beets,
a. Mexico has a comparative advantage over other countries and Mexico will export beets. b. Mexico has a comparative advantage over other countries and Mexico will import beets. c. other countries have a comparative advantage over Mexico and Mexico will export beets. d. other countries have a comparative advantage over Mexico and Mexico will import beets.
Why are Pigovian taxes preferred to regulatory policies as methods to remedy negative externalities?