According to the invisible hand principle, competitive markets generally
a. bring the self-interest of individuals into harmony with the efficient allocation of resources, even though centralized planning of economic activities is absent.
b. bring the self-interest of individuals into harmony with the efficient allocation of resources when the behavior of individuals is directed by democratic centralized planning.
c. require central direction; otherwise, the actions of self-interested individuals will conflict with the general interests of society.
d. promote the economic welfare of self-interested producers at the expense of unorganized groups such as consumers and taxpayers.
A
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The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a production point that is inefficient?
A) 0 units of good X and 40 units of good Y B) 6 units of good X and 28 units of good Y C) 10 units of good X and 16 units of good Y D) 3 units of good X and 35 units of good Y
Investments that are mistakenly made and generate losses
a. will occur when future revenues are known with certainty. b. indicate that the capital market is incapable of generating wealth. c. are normal costs of developing new projects and technologies in a world of uncertainty. d. will not occur when capital markets are operating efficiently.
An increase in the nominal interest rate, other things constant, will _____
Fill in the blank(s) with the appropriate word(s).
Originally, the threshold income level used to determine official poverty statistics was based on
A) a per capita income of $3000 in 1955 prices. B) the lowest income of the second quartile of families in the country. C) an income three times greater than necessary to purchase a nutritionally adequate diet. D) figures developed by a committee in the American Economic Association.