(Consider This) According to the Coase theorem:
A. government should levy excise taxes on firms that generate spillover or external costs.
B. taxes should be levied such that they change private behavior as little as possible.
C. private individuals can often negotiate their own resolution of externality problems, without
the need for government intervention.
D. private firms should not provide public goods.
Answer: C
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Certain kinds of tropical fruits are impossible to grow outdoors in the United States. Suppose, however, that in order to create jobs in Wyoming, the U.S. government offered extensive subsidies to firms to produce bananas
With the subsidies, firms could build greenhouses and offer the fruit at world prices. A) The United States now has a comparative advantage in bananas. B) The United States has a comparative advantage, but is not competitive. C) The United States is competitive, but does not have a comparative advantage. D) The United States has a comparative advantage and is competitive. E) None of the above.
How did the original focus of the IMF differ from that of the World Bank?
A) The IMF provided short-term loans and the World Bank provided long-term loans. B) The IMF assisted wealthy nations and the World Bank assisted developing nations. C) The IMF gave grants to developing countries and the World Bank made loans. D) The IMF dealt in North and South America only, and the World Bank dealt with the rest of the world.