Officially, the payroll tax is referred to as

Suppose a local union has a contract that calls for the nominal wage to increase by 5 percent plus 100 percent of any increase in the CPI. If the CPI increases by 4% and there is a 1% positive bias in the inflation rate, by how much would nominal wages unnecessarily increase?

a. 9 percent b. 1 percent c. 5 percent d. 3 percent e. 4 percent

Environmental regulation by the government

a. leads to ideal outcomes in most cases. b. is often based on goals for pollution levels that were determined by market signals. c. is most appropriate when the pollution of concern comes from many sources. d. is most likely to be economically efficient when the regulation provides substantial benefits for special-interest groups.