Banks prefer __________ hold excess reserves because __________
A) not to; excess reserves earn no interest
B) not to; banks are not required to hold them
C) to; excess reserves earn interest
D) to; banks need them to prevent runs
A
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Assume that production from a automobile manufacturer caused acid rain. If the government imposed a tax on the manufacturer equal to the cost of the acid rain, the government's action would
A) externalize the externality. B) eliminate all acid rain. C) force the manufacturer to move production to another location. D) internalize the externality.
The problem of a complex tax code filled with loopholes may be overcome by proposing a complete overhaul of the entire system that lowers taxes for everyone because it _____
a. represents a Pareto superior move b. takes advantage of rational ignorance c. benefits all special interests d. a and b