A pollution tax penalizes inefficient firms.

The problem of currency mismatch of net external wealth can be mitigated by:

A) ensuring the creditor countries always denominate loans in U.S. dollars. B) promoting internal financial markets where foreign securities can be traded. C) restricting borrowing yet encouraging lending. D) piling up large stocks of foreign currency assets in central bank reserves and sovereign wealth funds.

A perfectly competitive industry is in long-run equilibrium. If demand for the product decreases, we can expect:

A. firms to enter the market. B. firms to exit the market. C. no change in the number of firms in the market. D. There is not enough information to tell what will happen to the number of firms in the market.