A Pigovian Tax

question 19

Multiple Choice

A Pigovian tax:

• A)counters the effect of a negative externality.
• B)decreases efficiency in a market.
• C)decreases total surplus in a market.
• D)All of these statements are true.

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Definitions:

Foreign-Currency Exchange

The process of exchanging one currency for another, determining how much one currency is worth in terms of another.

Loanable Funds

The loanable funds market is a conceptual framework for understanding the market where borrowers and lenders interact, determining the supply and demand for loans and consequently the interest rate.

National Saving

The total amount of savings in a country, calculated as the sum of private savings by households and businesses, plus public savings by the government, minus any foreign borrowing.

Open-Economy Macroeconomic

A branch of macroeconomics that studies economies in which international trade and financial transactions play a significant role.