Public finance is the sub-discipline of economics that studies the various ways in which:
A. The general public acquire financing for their purchases
B. Governments raise and expend money
C. Firms in the financial sector provide services to households and firms
D. Governments may regulate and promote the stability of the financial sector
B. Governments raise and expend money
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If a British student pays her way to attend Harvard University, her action will:
A) cause the exchange rate of the British pound to rise. B) cause the exchange rate of the U.S. dollar to fall. C) change the supply of dollars in the foreign currency market. D) change the supply of pounds in the foreign currency market.
Economist A.C. Pigou argued that to deal with a negative externality in production, the government should impose a tax equal to the cost of the externality
What did Pigou believe should be done in the case of a positive externality in consumption? How would his recommendation impact the demand and market equilibrium for the product which is generating the positive externality?