According to your text, the "market economy" can best be understood as
A) an institution created by British merchants around the time of Smith's Wealth of Nations.
B) an extremely complex institution that emerged out of individuals specializing and trading among each other.
C) an institution unique to America.
D) an institution that could not exist in the absence of regulation.
B
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Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1, what changes in the market would result in an economically efficient output?
A) The price would increase, the quantity supplied would increase, and the quantity demanded would decrease. B) The price would increase, quantity demanded would increase, and quantity supplied would decrease. C) The quantity supplied would increase, the quantity demanded would decrease, and the equilibrium price would increase. D) The price would increase, the demand would increase, and the supply would decrease.
For any firm, price always equals
A. average revenue. B. marginal revenue. C. marginal cost. D. marginal profit.
According to traditional Keynesians, monetary policy is ineffective in affecting the economy during a recession because
A) an increase in the money supply will have little impact on interest rates. B) an increase in the money supply will only lead to higher interest rates. C) an increase in the money supply will only lead to lower investment spending. D) an increase in the money supply will raise the amount of government debt.
When a market is in equilibrium,
a. quantity demanded equals quantity supplied b. quantity demanded exceeds quantity supplied c. the demand curve is identical to the supply curve d. the economy must be at a point along the production possibilities frontier e. the law of demand is equivalent to the law of supply