An appropriate government policy toward negative externalities is to
A. subsidize the activity that creates the negative externality.
B. impose a tax or fine on the activity that creates the negative externality.
C. pay money to the party that creates the negative externality.
D. impose a tax on recipients of the negative externality.
Answer: B
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The short-run supply curve for a perfectly competitive firm is
A) the industry supply curve. B) its rising portion of the average-variable-cost curve. C) its entire marginal-cost curve. D) its marginal-cost curve above the average-variable-cost curve. E) its average-revenue curve.
How could the Federal Reserve encourage banks to lend out more of their reserves?
(A) By raising the required amount of reserves. (B) By reducing the money supply. (C) By reducing the discount rate. (D) By increasing the prime rate.