Suppose the government auctions off permits to car and truck owners, with each permit allowing the user to emit five tons of carbon dioxide each year from his or her vehicle. The total amount of carbon dioxide permitted is less than the amount currently emitted by vehicles. These permits could then be bought and sold on a market. Which of the following is the best term for this type of system?
A. A cap-and-trade system
B. A command-and-control system
C. A mitigation allowance
D. A price-based adaptation system
Answer: A
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If the Federal Reserve lowers the required reserve ratio, people will end up taking out ________ because the interest rates ________
A) more loans; will rise B) the same number of loans; will not change C) more loans; will fall D) fewer loans; will rise E) fewer loans; are controlled by the economic conditions alone
The measure of production that values output using base-year prices is called
A) underground GDP. B) nominal GDP. C) real GDP. D) value-added GDP.
Suppose the money supply is set to grow at 7%, real GDP grows at 5%, and the expected real interest rate on Aaa corporate bonds averages 6%
Using the quantity theory of money and the Fisher equation, the nominal interest rate on the Aaa corporate bond should be A) -2%. B) 2%. C) 6%. D) 8%.
Suppose a union successfully negotiates a wage rate for its members that is above the competitive wage rate, then
A) employment in the union sector will increase. B) the union must find a way to make union workers more productive. C) the union must also negotiate a fringe-benefit package that the membership will like. D) the union must find a way to ration jobs among the excessive number of workers who wish to work at the negotiated wage.