Suppose a Tax Equal to the Value of the Marginal

question 29

Multiple Choice

Suppose a tax equal to the value of the marginal external cost at the optimal output is imposed on a pollution generating good.All of the following will result from the tax except

• A)an increase in the equilibrium market price.
• B)a decrease in the equilibrium quantity produced and consumed.
• C)a decrease in market supply of the good.
• D)an increase in demand for the good.

Understand the concept of reserve requirements and their role in banking and monetary policy.

Calculate and interpret the money multiplier and its implications for the banking system.

Differentiate between required and excess reserves in the banking system.

Explain the impact of loans and deposits on a bank's balance sheet.

---

Definitions:

Sole Proprietorship

A business structure where a single individual both owns and runs the company, bearing unlimited personal liability for its debts.

Unlimited Liability

A business structure where the owners are personally responsible for all of the company's debts and liabilities.

Business License

A legal authorization to operate a business in a particular municipality, region, or country, often requiring renewal and compliance with specific regulations.

Primary Market Transactions

The issuance and sale of securities directly from the issuer to investors, as opposed to trading between investors in the secondary market.