A carbon tax is an example of:
A. a Coase theorem solution.
B. a Coase tax.
C. a Pigovian tax.
D. a market failure.
Answer: C
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Believers in fixed rules maintain that
a. with accurate forecasts, we can see inflation coming at least one year ahead of time. b. the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly. c. we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy's self-correcting mechanism. d. the economy's self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.
An increase in government expenditures is an example of expansionary fiscal policy.
Answer the following statement true (T) or false (F)
If an industry's long-run per-unit costs are constant as its output increases then
A) the firm's long-run economic profits must be greater than zero. B) the firm is most likely a decreasing-cost industry. C) the firm is most likely an increasing-cost industry. D) the firm is most likely a constant-cost industry.
Refer to Table 4-8. If a minimum wage of $10.00 is mandated there will be a
A) shortage of 40,000 units of labor. B) surplus of 20,000 units of labor. C) surplus of 40,000 units of labor. D) shortage of 20,000 units of labor.