QUESTION 7

1. Pick the best answer: In an industry that produces a unit of pollution with each unit of its output, an excise tax on the output is likely to lead to a more socially efficient output level than a tradable permit system if

   		The marginal damage rises rapidly when output varies over a narrow range and the demand curve rarely shifts.
   		The marginal damage rises rapidly when output varies over a narrow range and the demand curve often shifts.
   		The marginal damage is nearly constant at all levels of output and the demand curve often shifts.
   		The marginal damage is negative and the demand curve often shifts.
   		An excise tax is unlikely to lead to a more socially efficient output level than a tradable permit system.

4 points

QUESTION 8

1. Which of the following pieces of information gives the strongest evidence that availability of IRAs has only a small effect on personal saving (much smaller than the amount deposited in the IRAs)?

   		IRA depositors have more saving, on average, than people with similar income, education and family characteristics who have not deposited in IRAs.
   		The wealth of IRA depositors tends to grow faster than wealth of nondepositors.
   		After caps on IRA contributions were increased in the early 1980s, total personal savings rose.
   		IRA depositors in a given year tend to have slightly slower consumption growth than similar people who deposited in IRAs before, but not that year.

4 points

QUESTION 9

1. Which of the following pieces of information gives the strongest evidence that availability of IRAs increases personal saving?

   		IRA depositors have more saving, on average, than people with similar income, education and family characteristics who have not deposited in IRAs.
   		The wealth of IRA depositors tends to grow faster than wealth of nondepositors.
   		After caps on IRA contributions were increased in the early 1980s, total personal savings rose.
   		IRA depositors in a given year tend to have slightly slower consumption growth than similar people who deposited in IRAs before, but not that year.