Government regulators know that pollution is a problem in Cleveland. However, information on the social cost of this externality is difficult to come by
Which of the following statements best describes how this information problem might manifest itself? a. Well-intentioned regulators monitor a handful of polluting factors and are unable to determine how much they contribute to the problem. b. Well-intentioned regulators decide to shut down the plants and start government production in state-of-the-art factories. c. Well-intentioned regulators impose a collective tax that ends up reducing output beyond the optimal level of output.
d. Well-intentioned regulators fail to do anything because they are afraid of doing the wrong thing.
c
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An increase in the price of fuel and fertilizer used for corn would cause farmers to increase corn production in an effort to make up for lost profits
Indicate whether the statement is true or false
In prosperous times, commercial banks are likely to hold very small amounts of excess reserves because:
A. the Fed forces commercial banks to increase the money supply during economic expansions. B. it is very costly to transfer funds between commercial banks and the central banks. C. Federal Reserve Banks pay lower rates of interest on bank reserves than could be earned by the commercial banks loaning out the reserves. D. Federal Reserve Banks want to minimize their interest payments on such deposits.