Why are Pigovian taxes preferred to regulatory policies as methods to remedy negative externalities?
Pigovian taxes allow markets to coordinate optimal resource allocation. In order for regulations to be efficient, the government needs detailed information about specific industries, including information about the alternative technologies that those industries could adopt. Thus, taxes are likely to mitigate negative externalities at a lower cost to society.
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The circular flow shows that the household sector earns its income by
A) selling factors of production. B) buying factors of production. C) selling goods and services. D) selling financial assets.
The Bank of the United States did not:
a. act as a lender of last resort. b. help collect customs bonds. c. carry on foreign exchange operations. d. hold most of the U.S. Treasury deposits. e. The Bank of the United States engaged in all of these activities.