An Open Market Purchase of Bonds by the Central Bank

question 24

Multiple Choice

An open market purchase of bonds by the central bank will cause which of the following when a liquidity trap situation exists?

• A)The interest rate will decrease.
• B)The interest rate will not change.
• C)Output will increase.
• D)The money supply, M, will not change.
• E) none of the above

Distinguish between the concepts of tradable emissions permits and emissions taxes.

Grasp the role and impact of government regulation in achieving environmental objectives through emissions permits and taxes.

Recognize the challenges in setting up and implementing tradable emissions permits and emissions taxes.

Understand external benefits in the context of environmental economics and the impact on market outcomes without regulation.