"Creating a free market for carbon-dioxide emission permits would only encourage firms to pollute more." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. In a market of carbon-dioxide permits, firms that exceed their pollution limits must buy permits from firms that emit less than their limits. If an increase number of firms pollute more than their limits, then the market clearing price of the permits will increase. A higher price of the permits will induce firms to reduce their emissions.
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Suppose that industry X and industry Y have intra-industry trade indexes equal to 0.80 and 0.20, respectively. Which of the following is then correct?
a. There is a greater share of intra-industry trade in industry X than in industry Y. b. There is a greater share of intra-industry trade in industry Y than in industry X. c. Industry X and industry Y have equal shares of intra-industry trade. d. There is no intra-industry trade in either industry X or industry Y.
All of the following are sources of the impact lag except
A) it takes some time for the deposit multiplier process to work itself out. B) firms need some time to respond to the monetary policy with respect to their investment plans. C) it takes time for the Fed to formulate a policy that best addresses a problem in the economy. D) a monetary change is likely to affect the exchange rate, but that translates into a change in net exports only after some delay.