External Costs Are

question 63

Multiple Choice

External costs are

• A) negative externalities and are subtracted from marginal private costs to find marginal social costs.
• B) negative externalities and are added to marginal private costs to find marginal social costs.
• C) positive externalities and are added to marginal private costs to find marginal social costs.
• D) positive externalities and are subtracted from marginal private costs to find marginal social costs.

---

Definitions:

Real Exchange Rate

A measure that reflects the ratio of the prices of goods and services between two countries, taking into account inflation and thereby providing a more accurate comparison.

Net Exports

The difference between a country's total value of exports and total value of imports; a positive value indicates a trade surplus, while a negative value indicates a trade deficit.

Real Interest Rate

The interest rate adjusted for inflation, representing the true cost of borrowing and the real yield to lenders or investors.

Net Capital Outflow

The difference between the domestic country's purchase of foreign assets and the foreign purchases of the domestic country's assets over a specified period, reflecting the flow of capital across borders.