Explain how a "green tax" reduces pollution.
What will be an ideal response?
A green tax raises the price of a good associated with causing pollution (such as gasoline), leading to a reduction in the quantity demanded of the good. It also creates a revenue source for other pollution abatement efforts.
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The above table has the total revenue and total cost schedule for Omar, a perfectly competitive grower of rutabagas. Omar's total profit is maximized when he produces ________ bushels of rutabagas
A) 3 B) 5 C) 6 D) 8 E) 7
Medical research that results in a cure for a serious disease produces positive externalities. What is the impact of this positive externality on economic efficiency?
A) At equilibrium, less than the economically efficient quantity of medical research is produced. B) At equilibrium, more than the economically efficient quantity of medical research is produced. C) A deadweight loss occurs because at equilibrium the marginal social cost of medical research is greater than the marginal social benefit. D) A deadweight loss occurs because at equilibrium the marginal social cost equals the marginal social benefit.
The branch of macroeconomics concerned with changes in the natural real GDP is the theory of
A) business cycles. B) economic growth. C) GDP gaps. D) unemployment.
In 2008, the Fed responded to the financial crisis by:
A. offering nearly unlimited short-term financing to any bank that suddenly found itself short on cash. B. increasing the interest rates to encourage people to save, so banks would have more money on hand to lend. C. doing nothing, and allowing the automatic stabilizers to bring the economy back to its long run equilibrium. D. reducing money supply.