If a pollution tax imposed on a firm is greater than its external cost:
A. the externality will be fully internalized.
B. the social production cost will increase by the amount of the pollution tax.
C. the pollution tax will be efficient.
D. from a society's point of view, the firm will be producing too little.
Answer: D
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A major difference between stocks and bonds is that
A) bonds pay their owners dividends while stocks pay interest. B) bonds pay their owners interest while stocks pay dividends. C) the interest on a bond depends on the earnings of the corporation and is not guaranteed while dividends on stock are legally required. D) bonds represent ownership while stock represent debt.
As the financial crisis became more severe in 2008, the Federal Reserve undertook a(n) ________ of monetary policy, an effect of which is to ________ inflation
A) contraction; raise B) easing; raise C) contraction; lower D) easing; lower E) none of the above