In Some Cases, Tradable Pollution Permits May Be Better Than

question 62

Multiple Choice

In some cases, tradable pollution permits may be better than a corrective tax because

• A)pollution permits allow for a market solution while a corrective tax does not.
• B)pollution permits generate more revenue for the government than a corrective tax.
• C)pollution permits are never preferred over a corrective tax.
• D)the government can set a maximum level of pollution using permits.

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Definitions:

Natural Rate

The natural rate typically signifies the unemployment rate that maintains a steady inflation rate over time, also known as the natural rate of unemployment.

Short-run Ups

Temporary or brief increases in economic indicators or market performance.

Standard of Living

The level of wealth, comfort, material goods, and necessities available to a person, group, or nation.

Natural Rate

The long-term rate of unemployment expected in an economy, factoring in frictional and structural unemployment.