Lower marginal tax rates facilitate a higher return to innovative and risk-taking behavior

All group decisions are Pareto superior moves

a. True b. False

Refer to the above figure. Suppose E is the original equilibrium. An increase in the demand for dollars will be reflected in this figure by

A) an increase in the demand for yen as both imports and exports increase. B) a decrease in the demand for yen as the U.S. balance of payments improves. C) an increase in the supply of yen as Japan tries to buy more U.S. goods. D) a decrease in the supply of yen as Japan is able to pay less for U.S. goods.