If an Equal-Cost Lump-Sum Transfer Were Substituted for a Per

question 52

Multiple Choice

If an equal-cost lump-sum transfer were substituted for a per unit excise subsidy on good X:

• A)the consumption of X under the excise subsidy would be higher and the consumer would be on a higher indifference curve.
• B)the consumption of X under the excise subsidy would be higher,but the consumer would be on the same indifference curve.
• C)the consumption of X under the lump-sum transfer would be higher and the consumer would be on a higher indifference curve.
• D)the consumption of X under the lump-sum transfer could be higher,but the cost of the transfer would be higher.

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Definitions:

Sharpe Measure

A method to assess the performance of an investment by adjusting for its risk, comparing the excess return over the risk-free rate to the standard deviation of returns.

Dollar-Weighted

A method of calculating an investment's return that takes into account the time and amount of each cash flow.

Time-Weighted

A method used in finance to measure the performance of investments by calculating the compound growth rate of the investment over a specific period, regardless of external contributions or withdrawals.

Pension Fund

A type of investment pool established to manage and distribute retirement benefits for its members.