The government corrects for externalities in all of the following ways EXCEPT
A) taxes.
B) regulation.
C) lobbying.
D) subsidies.
C
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
By committing to reduce one's options during a sequential game, a player can force a change in his opponents' strategy, and that commitment strategy results in a:
A. payoff that he likely would have gotten anyway. B. cooperative equilibrium. C. payoff that would otherwise be out of reach. D. negative-negative outcome.
When an individual's wage rises, the income effect tends to
a. increase hours worked. b. decrease hours worked. c. leave hours worked unchanged. d. it is impossible to predict what will happen to hours worked.
Refer to the diagram for the federal funds market. If the Fed wants the federal funds rate to fall from i f1 to i f2 , it can use open-market operations to:
A. increase the demand for federal funds.
B. increase the supply of federal funds.
C. decrease the supply of federal funds.
D. decrease commercial bank reserves.