A tax meant to counter the effect of a negative externality is called:
A. a Coase tax.
B. a Pigovian tax.
C. an external tax.
D. a social benefit tax.
B. a Pigovian tax.
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Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises, and nominal value of the domestic currency falls. b. Real GDP falls, and nominal value of the domestic currency rises. c. Real GDP rises, and nominal value of the domestic currency remains the same. d. Real GDP rises, and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.
Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples
Most business cycle theories are
A. endogenous. B. exogenous. C. both endogenous and exogenous. D. neither exogenous nor endogenous.
Behavioral economics is an approach to the study of consumer behavior
A. that, in contrast to standard approaches in economics, relies on real-world data to evaluate the usefulness of economic models. B. that emphasizes the capabilities of individuals to succeed in attaining all their unlimited wants utilizing limited resources. C. that, in contrast to standard approaches in economics, utilizes the ceteris paribus assumption. D. that emphasizes psychological limitations and complications that potentially interfere with rational decision making.