If Government Uses Taxation to Correct for Negative Externalities, the Desired

question 169

Multiple Choice

If government uses taxation to correct for negative externalities, the desired consequence is

• A)a decrease in the quality of the good produced.
• B)an increase in the quantity of the good produced and/or consumed.
• C)a raise in revenue that can be used to provide subsidies to consumers.
• D)a decrease in the quantity of the good produced and/or consumed.
• E)increased revenue.

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Definitions:

After-tax Yield

The return on an investment after the effects of income taxes are taken into account, reflecting the actual gain to the investor.

Corporate Bond

A debt security issued by a corporation to raise funding, which promises to pay back with interest.

Annuities

Financial products that provide a stream of payments over time to the holder, often used for retirement purposes.

Retirement Years

The period of life after one ceases working full time based on achieving a certain age or financial status.