A market failure in the form of an externality arises when
a. production costs are included in the price of a good
b. not all costs and benefits are included in the price of a good
c. the benefits of consuming a good exceed the costs
d. a market fails to achieve equilibrium
e. equilibrium price is unstable
B
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Lending abroad represents:
A) a capital outflow. B) a capital inflow. C) positive net savings. D) none of the above.
When the economy is disturbed by a change in the output market
A) a fixed exchange rate has an advantage over a flexible rate. B) a floating exchange rate has an advantage over a fixed rate. C) a crawling peg exchange rate has an advantage over a flexible rate. D) a floating exchange rate has the same effect as fixed rate. E) a flexible exchange rate is not as effective as a fixed exchange rate.