The Environment Ministry in Japan proposed a new carbon tax to meet Japan's obligations to reduce carbon dioxide emissions under the Kyoto Treaty. The tax would be levied on producers and importers of fossil fuels, and the expectation is that it would be largely passed on to consumers. This proposal is an example of a:
A. free rider problem.
B. progressive tax.
C. voluntary program.
D. tax incentive policy.
Answer: D
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Consider voter preferences over a public good y that is being funded by a proportional income tax. a. Illustrate how this might lead to single peaked voter preferences. b. Suppose there exists a privately available good x that is substitute for y. How does this introduce non-single peakedness? c. Now suppose x is relatively complementary to y. What would you expect to happen to voter preferences as this complementarity gets stronger?
What will be an ideal response?
The two key factors that trigger speculative attacks on emerging market currencies are
A) deterioration in bank balance sheets and severe fiscal imbalances. B) deterioration in bank balance sheets and low interest rates abroad. C) low interest rates abroad and severe fiscal imbalances. D) low interest rates abroad and rising asset prices.
"Compensating wage differentials" arise because:
a. workers possess different skills. b. workers prefer the characteristics of some to those of others. c. firms pay higher wages for workers with higher marginal productivities. d. firms discriminate in hiring.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.