Using Expansionary Policies to Combat a Recession Would

question 51

Multiple Choice

Using expansionary policies to combat a recession would

• A) increase a budget deficit.
• B) increase a budget surplus.
• C) decrease discretionary spending.
• D) increase federal revenue.

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Definitions:

Social Cost

The total cost to society, including both private costs borne by producers and external costs borne by others outside the production process.

Carbon Fee

A charge imposed on the carbon content of fossil fuels, aimed at reducing carbon dioxide emissions.

Coase Theorem

An economic theory proposing that if trade in an externality is possible and there are no transaction costs, parties can negotiate solutions to conflicts that lead to an efficient outcome regardless of the initial allocation of property rights.

Pollution Tax

A tax levied on the amount of pollution emitted by firms to incentivize reduction in environmental harm.