In the case of a negative externality,
A. marginal external costs are greater than marginal private costs.
B. marginal external costs are less than marginal private costs.
C. marginal external benefits are greater than marginal private benefits.
D. marginal external benefits are equal to marginal private costs.
E. none of the above
Answer: D
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In the above figure, points u, v, y, and z show
A) an inefficient allocation of society's scarce resources. B) possible combinations of televisions and personal computers. C) a constant trade-off between televisions and personal computers. D) that society prefers more televisions than computers.
If the Federal Reserve buys $3 billion worth of Japanese yen and sells $5 billion of euros, how does this affect the official settlements balance?
A) Falls by $2 billion B) Rises by $2 billion C) Rises by $3 billion D) Falls by $5 billion