A government action that can help correct positive externalities is
A. an effluent fee charged to producers of the good that provides external benefits.
B. a subsidy to consumers of the good that provides external benefits.
C. a tax on producers of the good that provides external benefits.
D. regulations aimed at reduced production by sellers of the good that provides external benefits.
Answer: B
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When interest rates are near zero and traditional monetary policy is ineffective, the Fed or other central bank may resort to a strategy referred to as quantitative easing. What does this strategy involve?
A) allowing interest rates to rise slowly by providing substantial reserves for as long as is necessary to avoid inflation B) reducing the money supply to raise the interest rates slowly without discouraging spending C) keeping interest rates very low by providing substantial reserves for as long as is necessary to avoid deflation and encourage spending D) increasing the money supply and interest rates at a constant rate to stimulate economic activity
Which of the following would be the most likely candidate for direct application of the benefits principle of taxation?
a. education b. fire protection c. police protection d. use of roads