If a Pigovian tax is not large enough, the resulting market quantity:
A. will be equal to the efficient quantity.
B. will be more than the efficient quantity.
C. will be less than the efficient quantity.
D. will be where the social marginal cost equals the social marginal benefit.
C. will be less than the efficient quantity.
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If the government raised taxes and reduced government spending in order to reduce the budget deficit, monetary policy could accommodate this policy by
a. increasing money demand. b. increasing money supply. c. decreasing money supply. d. increase unemployment insurance.
Which is an important aspect of the perfectly competitive market that leads to long run equilibrium?
A) perfect information B) freedom of entry and exit C) price taking behavior D) homogeneous products
The price elasticity of demand measures
A) the consumers' sensitivity to a price change. B) the producers' sensitivity to a price change. C) how much the market price changes in response to a change in demand. D) how much the demand changes in response to a change in income.
Tara deposits money into an account with a nominal interest rate of 6 percent. She expects inflation to be 2 percent. Her tax rate is 20 percent. Tara's after-tax real rate of interest
a. will be 2.8 percent if inflation turns out to be 2 percent; it will be higher if inflation turns out to be higher than 2 percent. b. will be 2.8 percent if inflation turns out to be 2 percent; it will be lower if inflation turns out to be higher than 2 percent. c. will be 3.2 percent if inflation turns out to be 2 percent; it will be higher if inflation turns out to be higher than 2 percent. d. will be 3.2 percent if inflation turns out to be 2 percent; it will be lower if inflation turns out to be higher than 2 percent.