A free market economy is one in which ________.
A) the government or other centralized group determines what to produce
B) individuals determine what to produce with some level of government involvement
C) a tightly knit social network barters and trades for goods at a market
D) individuals and private firms make decisions based on consumer needs and wants
E) privately owned, profit-seeking enterprises are converted to government-owned production and services
D) individuals and private firms make decisions based on consumer needs and wants
Explanation: D) A market economy is run entirely by individuals and businesses with no government involvement. Responses A) refers to a planned economy; B) to a mixed economy; and C) to a traditional economy.
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The more that firms in an economy believe that the demand for their goods is mainly influenced by the aggregate level of demand and not "local conditions," the ________ is the SAS curve and thus the ________ are cycles in real GDP
A) steeper, larger B) steeper, smaller C) flatter, larger D) flatter, smaller
The price that a person must pay in order acquire purchasing power now rather than in the future is called
a. the interest rate. b. the foreign exchange rate. c. the inflationary premium. d. the risk premium.
If consumers spend 75 cents out of every extra dollar received, the:
A. MPS is 0.75. B. MPC is 0.25. C. Multiplier is 4. D. Multiplier is 7.5.
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.