To Internalise a Negative Externality, an Appropriate Public Policy Response

question 3

Multiple Choice

To internalise a negative externality, an appropriate public policy response would be to

• A) have the government take over the production of the good causing the externality.
• B) ban the production of all goods creating negative externalities.
• C) tax the good.
• D) subsidise the good.

Calculate interest paid over a specific period within the mortgage term.

Evaluate the financial implications of mortgage refinancing options including principal reduction and payment adjustment.

Understand the implications of special mortgage features such as "cash-back" offers and the ability to skip payments.

Understand the fundamental accounting equation and its components.

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Definitions:

Stabilizes Conditions

Actions or interventions that make a situation or condition more steady and less likely to change.

Arousal

Physiological activation (such as increased brain activity) or increased autonomic responses (such as increased heart rate, sweating, or muscle tension).

Incentives

External objects or external goals, rather than internal drives, that motivate behaviors.

Drive Reduction

A motivation theory that suggests behavior is motivated by the desire to reduce internal drives of tension or arousal that arise from unmet needs.