Author Question: In order to increase society's total welfare (social efficiency), a production process that produces ... (Read 122 times)

stevenposner · **on:** Jun 30, 2018

In order to increase society's total welfare (social efficiency), a production process that produces a negative externality should be:
a. taxed.
b. provided by the government.
c. ignored.
d. subsidized.

Question 2

Suppose the Fed purchases 5,000 in U.S. government securities from the Last National Bank and the Last National Bank's account at the Federal Reserve district bank increases by 5,000 . Which of the following is a result of this transaction?
a. The Last National Bank's balance sheet shows a change in the composition of its assets.
b. Both the Last National Bank's assets and its liabilities rise by 5,000.
c. Both the Fed's assets and its liabilities fall by 5,000.
d. Only the Fed's liabilities change, while its assets remain unchanged.
e. This transaction decreases the money supply.