A Pigovian tax internalizes an external cost because
a. the cost then enters the decision-making process of the producer.
b. it would be collected by the Internal Revenue Service.
c. the revenue is used to compensate injured parties.
d. no transactions costs are created.
a. the cost then enters the decision-making process of the producer.
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According to the textbook, which of the following methods for coordinating the supplies and demands for scarce goods tends to work best to enhance the freedom and power of people who want the goods?
A) A lottery B) Equal shares for all C) First come, first served D) Highest money bid E) Might makes right
Ceteris paribus, if Americans decide they want to drive more German-made cars, this causes the ________ German currency to ________.
A. demand for; decrease B. supply of; increase C. supply of; decrease D. demand for; increase
Answer the following statements true (T) or false (F)
1. When a bank accepts additional deposits, its required reserves and excess reserves will both increase. 2. When a bank grants a loan, the money supply M1 will increase, even if the funds from the loan are not spent. 3. The primary purpose of the reserve requirements for banks is not really to ensure liquidity to meet withdrawals, but rather to allow the Fed some control over the money supply. 4. The granting of a $10,000 loan and the purchase of a $10,000 government bond from a securities dealer by a commercial bank would have the same effect on the money supply. 5. A bank can grant loans up to the amount of its actual reserves.
Which of the following will tend to increase the size of the multiplier
A. a higher marginal tax rate B. a higher marginal propensity to import C. a higher marginal propensity to consume D. a higher level of government spending