SAPLINGPLUS ACCESS MICRO 1 TERM
4th Edition
ISBN: 9781319319038
Author: KRUGMAN
Publisher: MAC LTD
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Chapter 17, Problem 3P
To determine
The types of regulations.
Concept introduction:
Externality:
An externality is the consequence of an economic activity which can have a positive or a negative impact on the third party who is completely unrelated to the activity.
The ideal measure to stop negative externality is to impose a tax. The tax should be equal to the marginal harm created by the externality.
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Sustainable Growth - Lowering interest rates encourages investment in productive capacity, which can lead to long-term economic growth rather than a temporary boost from cash transfers.
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