The production of smoke as a pollutant is a failure of the market system

Producing leather creates external costs in the form of water pollution. The figure above illustrates the market for leather. In the absence of any government regulation, how many tons of leather will be produced?

A) 0 tons B) 200 tons C) 300 tons D) more than 300 tons E) None of the above answers is correct.

Refer to Figure 15-11. In the dynamic model of AD-AS in the figure above, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in

A) unemployment rates higher than what would occur if no policy had been pursued. B) real GDP lower than what would occur if no policy had been pursued. C) short-term interest rates higher than what would occur if no policy had been pursued. D) inflation higher than what would occur if no policy had been pursued.