Suppose the government imposes a per unit tax on an item whose production process creates a negative externality. Suppose the tax is exactly the value of the marginal externality cost. If the government now uses the tax revenue to clean up pollution from this process, the market will:

The total of all planned expenditures in the entire economy is the definition of

A) production possibilities curve. B) aggregate demand. C) net domestic product. D) aggregate supply.

Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model? a. The quantity of real

loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more negative (or less positive). b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive). c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative). d. The quantity of real loanable funds per time period and net nonreserve international borrowing/lending balance remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.