The Government Can Internalize an Externality by Taxing Goods That

question 9

True/False

The government can internalize an externality by taxing goods that have negative externalities and subsidizing goods that have positive externalities.

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Definitions:

Debenture

A type of debt instrument that is not secured by physical assets or collateral.

Unsecured Bond

A bond that does not have specific assets as collateral, making it riskier than secured bonds, thereby relying on the issuer's creditworthiness.

Par Value

A nominal value of a security or stock set by the issuing company, which may not reflect its market value.

Premium

An amount paid for an insurance policy or the amount by which a bond or stock sells above its face value.