The government is considering levying a tax on the pollution generated from two electric power plants (Plant A and Plant B). Plant A is located in a city with a high density of population, and Plant B is located in the rural area with a low density of population. The government should
A. tax only Plant A but not Plant B because Plant B generates less revenue.
B. levy a higher tax per unit of pollution on Plant B because of its lower economic damage.
C. levy the same tax per unit of pollution on both plants.
D. levy a higher tax per unit of pollution on Plant A because of its higher economic damage.
Answer: D
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Two advisors to the president have given their policy recommendations, and they are in disagreement. Why do these economists disagree?
A. Because they do not have all relevant information about the problem B. Because they disagree on the nature of some cause–effect relationship C. Because they have different values and opinions D. All of the above are reasons for disagreements among economists.
We say that a countrycompletely specializes in production when it spends all of its resources producing:
A. a particular good. B. those goods it has an absolute advantage in producing. C. only what other countries need. D. what it can make more of than anyone else.
__________ countries have explicit requirements about the number of parties that can participate in an election.
A. Most B. Few C. None D. All
Which of the following is not an automatic stabilizer?
a. Forward-looking behavior b. Interest rates c. Imports d. Transfer payments e. Consumption spending