A Corrective Tax

question 5

Multiple Choice

A corrective tax

• A)allocates pollution to those factories that face the highest cost of reducing it.
• B)is a form of regulation.
• C)works well for all types of externalities.
• D)is inferior to regulatory policy according to most economists.

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Definitions:

Real Interest Income

The income from interest after adjusting for inflation, reflecting the true purchasing power of interest earnings.

Nominal Interest Income

The income earned from investments or savings before adjusting for inflation, expressed in the current currency.

Money Supply

The sum quantity of financial assets in an economy at a particular instant.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting repayment in the future.