The purpose of an effluent fee is to
A) reduce the amount produced of a good and to raise the market price.
B) correct for pollution while keeping the price of the good the same as before the correction.
C) reward people producing externalities.
D) encourage producers to keep the quantity produced the same while lowering the price.
A
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If a firm had a fixed proportions technology, then the pollution produced by this firm
A) cannot be reduced. B) can be reduced only by lowering the level of output (holding technology constant). C) can be reduced by changing how the output is produced within the bounds of the existing technology. D) can be reduced only by increasing the number of firms in the industry. E) can be reduced only by changing the technology.
Suppose that the economy is at an inflation rate such that unemployment is above the natural rate. How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer