Which of the following statements is NOT true about the price system?
A. Individuals have freedom to purchase what they want.
B. Firms have total control over what consumers can buy.
C. The price system allows resources to flow from low-valued uses to high-valued uses.
D. The price system allows for economic efficiency.
Answer: B
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Considering the tax and transfer system in the United States, the poor receive
A) less in benefits than they pay in taxes, and so do the rich. B) more in benefits than they pay in taxes, and so do the rich. C) less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes. D) more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes.
Suppose an American worker can make 100 chairs or catch 900 fish per day. On the other hand, a Chilean worker, can make 40 chairs or catch 400 fish per day. The United States has an absolute advantage in the production of both fish and chairs. This means that the United States:
A. should produce only chairs and trade with Chile to get fish. B. should produce only fish and trade with Chile to get chairs. C. should take advantage of Chile by trading with them. D. can produce more fish and chairs than Chile given the same amount of workers.
Assume the United States can use a given amount of its resources to produce either 20 airplanes or 8 automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. The U.S. should specialize in:
a. airplanes. b. automobiles. c. both goods. d. neither good.
In reality, the Fed's information is fairly imprecise in regards to:
A. inflation rates. B. potential GDP. C. actual real GDP. D. unemployment.