Suppose a Pigovian tax is imposed on a market that is characterized by one or more externalities. Is this a command-and-control policy or is it a market-based policy?
A Pigovian tax is a market-based policy.
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
Total utility is best defined as the
A. additional satisfaction received from consuming an additional unit of a good or service. B. maximum amount of satisfaction from consuming a product. C. change in marginal utility multiplied by the price of a product. D. total satisfaction received from consuming a good, service, or combination of goods and services.
To eliminate an inflationary gap using fiscal policy, the government could
A) increase government expenditure on goods and services and simultaneously increase taxes by an equal amount. B) only decrease taxes. C) increase government expenditure on goods and services and simultaneously decrease taxes by an equal amount. D) decrease the quantity of money. E) increase taxes.
How is a production possibilities curve similar to a budget constraint?
What will be an ideal response?