If the production of a particular good involves significant ...

[Kthamas]

If the production of a particular good involves significant external costs, to force the externality to be internalized the government might:
 a. impose a tax on production of the good in order to increase production.
  b. impose a tax on production of the good in order to decrease production.
  c. offer a subsidy for production of the good in order to increase production.
  d. offer a subsidy for production of the good in order to decrease production.

Question 2

According to rational expectations theory:
 a. a large reduction in unemployment can be achieved with a relatively small increase in inflation.
 b. people are not easily fooled by changes in government fiscal policy.
 c. inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time.
  d. the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate.

[zacnyjessica]

Answer to Question 1

b

Answer to Question 2

b

[Kthamas]

Thank you

[zacnyjessica]

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