The market economy is founded on ______.
a. voluntary exchange and the price system that guides production and distribution
b. fiscal policies that include government-mandated minimum or maximum prices
c. international guidelines and treaties enforced by the World Trade Organization
d. a complex system of tariffs and taxes intended to fairly divide the economic pie
a. voluntary exchange and the price system that guides production and distribution
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During an economic downturn, increased spending on infrastructure repairs is:
A. more costly because the resources needed to complete those projects aren't available. B. a bad idea because there's no need for better infrastructure during an economic downturn. C. less costly because the resources needed to complete those projects would otherwise sit idle. D. a good idea because it will slow the pace of economic recovery.
In general, an increase in wages will lead to some reaction in line with
a. the income effect but not the substitution effect. b. the substitution effect but not the income effect. c. both the income and substitution effect. d. neither the income effect nor the substitution effect.
We can explain continued increases in both output and the price level by supposing that only aggregate demand shifted right over time
a. True b. False Indicate whether the statement is true or false
An increase in the interest rate will increase consumption spending
a. true b. false