If the Objective of Economic Policy Is to Decrease the Amount

question 216

Multiple Choice

If the objective of economic policy is to decrease the amount of pollution by an industry in the long run, the

• A)most effective policy action would be a subsidy to firms for the reduction of emissions.
• B)most effective policy action would be a tax on polluting firms.
• C)appropriate course of action for government is to do nothing.
• D)appropriate course of action for government is to increase R&D outlays to develop technology to remove the emissions from the environment.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the amount of the good that consumers are willing and able to purchase at that price.

Exchange Rate

The price of one currency expressed in terms of another currency.

Appreciated

An increase in the value of an asset or currency in comparison to other assets, currencies, or benchmarks.

Yen

The official currency of Japan, used as a medium of exchange in one of the world's largest economies.