A. none of these answers

B. a social cost curve that is below the supply curve (private cost curve) for a good

D. a social value curve that is above the demand curve (private value curve) for a good

A. Roberto will pay Thomas 100 and Roberto will stop playing loud music

B. Roberto will pay Thomas 150 and Roberto will continue to play loud music

D. Thomas will pay Roberto between 100 and 150 and Roberto will continue to play loud music

A. have the government take over the production of the good causing the externality

B. subsidize the good

C. ban the production of all goods creating negative externalities

B. They would all rank equally high because the same result can be obtained from any one of the policies

C. Pigouvian taxes, command-and-control policies, tradable pollution permits.

D. tradable pollution permits command-and-control policies, Pigovian taxes.

E. command-and-control policies, tradable pollution permits, Pigovian taxes.

A. an attempt to internalize a negative externality

B. a command-and-control policy

D. a Pigouvian tax

A. equilibrium quantity to exceed the optimal quantity

B. equilibrium quantity to be either above or below the optimal quantity

D. equilibrium quantity to equal the optimal quantity

A. none of these answers

B. a social value curve that is below the demand curve (private value curve) for a good

C. a social cost curve that is above the supply curve (private cost curve) for a good

A. All of these answers are true

B. Pigovian taxes are more likely to reduce pollution to a targeted amount than tradable pollution permits.

D. To set the quantity of pollution with tradable pollution permits, the regulator must know everything about the demand for pollution rights.

E. Tradable pollution permits efficiently reduce pollution only if they are initially distributed to the firms that can regulator pollution at the lowest cost.

B. equilibrium quantity to be either above or below the optimal quantity

C. optimal quantity to exceed the equilibrium quantity.

D. equilibrium quantity to equal the optimal quantity

A. determines the demand for pollution rights.

C. reduces the incentive for technological innovations to further reduce pollution

D. Sets the quantity of pollution

A. a tradeable pollution permits.

C. an application of the Coase theorem

D. an attempt to internalize a positive externality

B. by allocating tradable technology permits to high technology industry.

C. to internalize the negative externality associated with industrial pollution

D. to help stimulate private solution to the technology externality

A. a technology spillover

B. a positive externality

D. an efficient market outcome.

A. It is efficient for Roberto to stop playing loud music only if Thomas has the property right to peace and quiet

B. It is efficient for Roberto to stop playing loud music only if Roberto has the property right to play loud music

D. it is efficient for Roberto to continue to play loud music

A. the cost that accrues to the seller in a market

C. the compensation paid to a firms external consultants.

D. none of these answers

E. the benefit that accrues to the buyer in a market

B. An increase in discretionary government spending

C. An increase in corporation tax

D. Lower interest rates

A. fiscal drag

B. debt burden

C. bracket creep

A. decrease

B. remain the same, as long as bank hold no excess reserves

C. could either increase or decrease

A. The actions of the central bank in controlling the money supply

B. The governments attitude to taxation

C. The government regulation of financial intermediaries

A. the time that it takes for policy makers to recognize the existence of boom of bust

B. the time needed for parliament to agree to a tax cut.

D. the time that is necessary to put the desired policy into effect

A. unrelated to central bank action

B. the same as it is for fiscal policy

D. mush longer than it is for fiscal policy

A. Tax banks increase with inflation

B. Government spending falls to reduce aggregate demand

D. Tax rates move inversely with inflation

A. taxes paid by firms and households to the government minus the cost of collecting the taxes

B. government expenditures minus government revenues

D. Taxes paid by firms and households to the government plus transfer payments made to firm and households

A. the change in exports and imports prices

C. the foreign response to price changes

D. the change in exchange rates

A. Stay the same

C. Improve

D. Increase with inflation

B. what the government borrows cannot be used for private investment

C. credit rationing

D. Bank of England controls on commercial bank lending

A. Margaret Thatcher

C. John Maynard Keynes

D. Ronald Reagan

A. The amount of tax paid will increase by Rs 800

B. The amount of tax paid will increase by Rs4,800

C. The amount of tax paid will increase by Rs4,000

B. decrease; decrease

C. increase: increase

D. decrease; increase

B. not allowing commercial banks to issue notes and coins

C. controlling the money multiplier

D. restricting the amount of cash in circulation

B. reduce the minimum reserve asset ratio.

C. sell government securities on the open market

D. lower interest rates

A. increase; decrease

B. decrease; decrease

C. increase; increase

B. increase the minimum reserve asset ratio.

C. sell government securities on the open market

D. raise interest rates

A. liquidity ratio

B. required reserve ratio

C. banks line of credit

B. Discourage consumption of negative externalities

C. Discourage consumption of public goods

D. Discourage consumption of positive externalities

A. The total tax paid / total income

B. Change in income / change in tax paid

C. Total income / total tax paid

A. The amount of tax paid increase with income

B. The average rate of tax is constant as income increases

C. The marginal rate of tax decrease with more income

B. monetary policy can only be effective if it is a long-term policy

C. the money supply must only expand at the rate of growth of real national income

D. bad money drives out good

A. A measure of the countrys trade position

B. A measure of the countrys total debt

D. A measure of the governments monetary stance

A. GDP decrease rapidly

C. GDP remains unchanged

D. GDP decrease slightly

B. sells government securities on the open market

C. buys government securities on the open market

D. sells less government bonds than are required to finance the PSBR

A. This will have no effect on the governments budget position

B. The governments budget position should automatically improve

D. This will reduce the governments tax revenue

A. is not sufficiently stimulating or contracting the economy at any time

C. is desirable

D. is effective

B. 25%

C. Rs 50000

D. Rs 10000

A. the buyers

B. Neither buyers nor sellers desire a price floor.

D. Both buyers and sellers desire a price floor.

A. The surplus created by the price ceiling is greater in the short run than in the long run

B. The shortage created by the price ceiling is greater in the short ran than in the long run.

D. The surplus created by the price ceiling is greater in the long run than in the short run

B. falls entirely on sellers

C. is evenly distributed between buyers and sellers.

D. falls more heavily on sellers

A. There will be surplus of petrol

C. There will be a shortage of petrol

D. A significant increase in the supply for petrol could cause the price ceiling to become a binding constraint.

B. always determines the price at which a good must be sold

C. is not a binding constraint if it is set above the equilibrium price

D. sets a legal maximum on the price at which a good can be sold

A. The tax burden falls most heavily on the side of the market (buyers and sellers) that is most willing to leave the market when price movements are unfavorable to them.

B. The burden of a tax falls on the side of the market (buyers or sellers) from which it is collected

D. The tax burden generated from a tax placed on a good consumer perceive to be a necessity will fall most heavily on the sellers of the good