The government can _______________ change an inefficient market outcome (in the case where there is a negative externality) into an efficient outcome by imposing a tax on the activity that generates the negative externality
A) in almost all situations
B) possibly
C) not
D) in all situations
E) a or d
B
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Which of the following has been a problem faced by the FDIC in its provision of federal deposit insurance?
A) a relatively low number of bank failures each year, which has reduced the need for deposit insurance B) moral hazard arising from the tendency for the highest-risk banks to be those most interested in obtaining deposit insurance in the first place C) adverse selection arising from the tendency for banks to take on more risk after they receive deposit insurance D) moral hazard arising from the tendency for banks to take on more risk after they receive deposit insurance
Unlike a perfectly competitive firm, a monopolistic competitor does not have a short-run shut-down point
Indicate whether the statement is true or false
Classicals argue that an adverse supply shock would
A) raise neither the natural rate of unemployment nor the actual rate of unemployment. B) raise the actual rate of unemployment, but not the natural rate of unemployment. C) raise the natural rate of unemployment, but not the actual rate of unemployment. D) raise both the natural rate of unemployment and the actual rate of unemployment.
If the price of motel rooms increases by 10 percent while the prices of other goods and services increase by 5 percent on average, the relative price of motel rooms has:
A. decreased by 10 percent. B. increased. C. remained constant. D. decreased by 5 percent.