The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because
A) all gains from mutually beneficial trade are captured.
B) the Federal Trade Commission regulates the market.
C) of the rise of the legislative apparatus that supports trade.
D) the Justice Department monitors market activities.
A
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Refer to Figure 2-7. Assume a technological advancement greatly reduces the cost to produce self-driving vehicles. This is best represented by the
A) movement from K to L in Graph C. B) movement from G to H in Graph B. C) movement from H to J in Graph B. D) movement from E to F in Graph A.
A provision of the Dodd-Frank Act of 2010 revised the Federal Reserve Act to
A) restrict the Fed's ability to make loans except to commercial banks. B) allow the Fed to buy commercial paper issued by nonfinancial firms. C) allow the Fed to make loans to investment banks. D) allow the Fed to make loans to any individual, partnership, or corporation in unusual and exigent circumstances.
A five-cent deposit on beer bottles
A) provides a positive incentive because it rewards people for recycling. B) provides a negative incentive because it punishes people who do not recycle. C) is an irrational policy, because it fails to take into account incentives. D) is an irrational policy, because it fails to take into account self-interest.
Raising the required reserve ratio __________ the simple deposit multiplier which will __________ the economy's money supply
A) raises; increase B) raises; decrease C) lowers; increase D) lowers; decrease