If a tax on gasoline is appropriately set, the congestion externality on roads can be fully internalized -- resulting in the efficient level of congestion on roads.
Answer the following statement true (T) or false (F)
False
Rationale: Given that road congestion only arises during certain "peak" hours, taxing gasoline to internalize the externality at peak times would "over-tax" gasoline during non-peak hours.
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A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions)?
A) The demand for video game consoles would decrease and the equilibrium price of video game consoles would decrease. B) The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles. C) The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease. D) The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.
Which of the following transactions is a debit in the US current account?
A) Export of merchandise B) Export of services C) Gifts to foreigners D) Foreign bond purchases