To internalize a negative externality: a. a producer's costs ...

[Wadzanai]

To internalize a negative externality:
 a. a producer's costs could be reduced by an amount equal to the external cost resulting from the production of a good.
  b. a producer's costs could be increased by an amount equal to the external cost resulting from the production of a good.
  c. a producer could receive a subsidy equal to the external cost resulting from the production of a good.
 d. None of the above are correct.

Question 2

If the public has correct rational expectations and the Fed increases both reserve requirements and the discount rate, it would be expected to result in:
 a. a higher level of real output and a lower price level.
  b. a lower price level but no change in real output.
 c. a higher price level and a reduced level of real output.
  d. a higher price level but no change in real output.

[kxciann]

Answer to Question 1

b

Answer to Question 2

b