Which of the Following Is an Example of an External

question 147

Multiple Choice

Which of the following is an example of an external benefit?

• A) More people start to ride the bus because they become more public‐spirited and, as a result, air pollution is reduced.
• B) Firms are able to reduce their costs of production by using a more efficient technology.
• C) The federal government spends a million dollars on improving national parks.
• D) A firm has just gotten permission to open a landfill on property that is adjacent to your home.

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Definitions:

Government Agencies

Organizations at the federal, state, or local level that implement and manage specific government policies and programs.

Federal Funds Rate

The interest rate at which depository institutions lend reserve balances to other depository institutions overnight, a key economic policy tool used by the Federal Reserve.

Economic Growth

An increase in the production of goods and services in an economy over a period, reflecting a rise in national income and standard of living.

Tax Rate

A tax rate is the percentage at which an individual or corporation is taxed.