If an activity generates a positive externality, the government can increase total economic surplus by ________ the activity, and if an activity generates a negative externality, the government can increase total economic surplus by ________ the activity.
A. subsidizing; taxing
B. subsidizing; banning
C. publicizing; taxing
D. taxing; banning
Answer: A
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The slope of the supply curve of reserves can be attributed to the fact that:
A) quantity supplied of reserves decreases with the federal funds rate. B) the supply of reserves is arbitrarily set by the World Bank. C) the Fed fixes the supply of reserves. D) quantity supplied of reserves increases with the federal funds rate.
List four characteristics of monopolistic competition
What will be an ideal response?
If Congress wanted to counteract the effects of a recession it could
A) increase government purchases. B) increase tax rates. C) increase taxes by a fixed amount. D) decrease defense spending.
The aim of antitrust policy is to:
a. provide adequate incentives for inventors and entrepreneurs. b. prevent firms from acquiring or exercising undue market power. c. protect established firms by deterring new entry into industries. d. regulate the prices charged by perfectly competitive firms.