When the government of a country levies a tax to correct a negative externality, it is often referred to as:

Question

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The correct term for a tax levied to correct a negative externality is a Pigovian tax, named after economist Arthur Pigou. This type of tax is aimed at internalizing the external costs of a market activity, such as pollution or traffic congestion, in order to discourage it and encourage alternative activities that have less negative externalities.

When the Government of a Country Levies a Tax to Correct