A difficulty with using a uniform per-unit tax to address a negative externality is that
A) the tax will reduce output.
B) the tax will increase price.
C) the social cost of pollution might vary across geographic regions.
D) the social cost of pollution should not be assessed on the consumers, but should be assessed on the firms.
C
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In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?
A) GDP increases by $8 million and inventory investment decreases by $1 million. B) GDP increases by $9 million and inventory investment increases by $1 million. C) Inventory investment decreases by $1 million. D) GDP increases by $8 million and investment increases by $1 million. E) GDP increases by $17 million.
During inflation, the optimal discretionary fiscal policy would be _____
a. to decrease taxes b. to increase government spending c. to decrease the reserve ratio d. to increase taxes e. to decrease the market interest rate