Much of the nation's coal is extracted by strip mining. This process leaves a huge barren hole in the ground when complete, and the cost of replanting the trees is approximately $10 per ton of coal. Burning the coal for electricity causes air pollution. No one knows how much damage the air pollution causes, but we know that for another $10 per ton the power plant can be outfitted with a pollution control device. What is one measure of the true social cost of coal fired electricity, in dollars per ton?
A. Private marginal cost plus the $10 replanting charge.
B. Private marginal cost plus the $10 emission control charge.
C. Only the $20 of replanting and emission control charges, because the other costs are private, not social.
D. Private marginal cost plus the $20 of replanting and emission control charges.
Answer: D
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If the Fed increases the quantity of money, in the short run the ________ and in the long run the ________
A) nominal interest rate falls; the price level falls B) nominal interest rate falls; the price level rises C) price level rises; the nominal interest rate falls D) nominal interest rate rises; the price level falls E) nominal interest rate rises; the price level rises
Why does the LL schedule have a negative slope?
A) The economic stability loss from pegging to the area's currencies rises as the degree of economic interdependence rises. B) The economic stability loss from pegging to the area's currencies falls as the degree of economic interdependence rises. C) The economic stability loss from pegging to the area's currencies falls as the degree of economic interdependence falls. D) The economic stability loss from pegging to the area's currencies rises as the degree of economic activity increases. E) The economic stability loss from pegging to the area's currencies is constant, even as the degree of economic activity increases.
135. In the early 2000s, the government passed laws requiring banks and mortgage brokers to disclose the terms of home loans. This action by the government was an attempt to:
A. solve the information asymmetry problem, but did not work as intended. B. solve the information asymmetry problem and led to an improvement in the housing market. C. screen out risky or shady banks and mortgage brokers. D. signal to consumers that the government cared about the value of their homes.
If the rate of return is lower than the cost of borrowing the:
A. investor will lose money on net after paying back the loan. B. investor should take out the loan. C. borrower will make money by taking out the loan. D. savers will lose out by taking a loan.