Question

QUESTION 31 If a good has zero external costs, then social marginal cost is less than marginal private cost. social marginal cost equal private marginal cost. we need more information to determine the relationship between private and social costs. social cost is greater than private marginal cost. QUESTION 32 A fiscal action that is initiated by an act of Congress is called automatic fiscal policy. discretionary fiscal policy. generational fiscal policy the government expenditure multiplier. QUESTION 33 The three main methods that governments use to cope with an external cost of production include all of the following EXCEPT cap-and-trade price floors. emission charges. top-down regulations taxes. QUESTION 34 In our our basic pollution reduction model in Chapter 5 with multiple plants, imposing a quantity restriction is a more efficient solution than a price (tax) alternative. True False QUESTION 35 SOP doo, 2009-100) Price 0 15 16 17 18 19 20 Red GoPros of 2009 dollars In the above figure, this economy is running a: cyclical deficit cyclical and structural deficit structural deficit neither cyclical or structural deficit.

Answer 1

31)

Answer: (B)

Social Marginal cost equal to the Private Marginal cost. It implies that Marginal External cost is zero.

Social marginal cost = Private Marginal cost + External Marginal cost.

32)

Answer: ( B)

Discretionary fiscal policy means government deliberately making changes in its expenditure and taxes.

33)

Answer: (B)

Floor price is set up to promote output of certain good.