Beginning from a situation where there were no clear property ...

[EAugust]

Beginning from a situation where there were no clear property rights to clean air and water:
 a. subsidies could not improve efficiency in cases of external benefits.
 b. subsidies could not improve efficiency in cases of external costs.
 c. taxes could not improve efficiency in cases of external costs.
 d. neither external benefits nor external costs could improve efficiency in either the case of external benefits or the case of external costs.

Question 2

One important unintended consequence of the Smoot-Hawley Tariff Act was to:
 a. lessen the severity of the Great Depression by increasing exports.
  b. provide the federal government with an effective tool for exercising monetary policy.
  c. increase the efficiency of domestic automobile production.
  d. increase the severity of the Great Depression by causing other countries to retaliate, and thus leading to a decline in exports.
  e. increase the U.S. government budget deficit by 15 million.

[yeungji]

Answer to Question 1

b

Answer to Question 2

d

[EAugust]

Excellent

[phuda]

TYSM