Which type of economic system will produce the highest degree of allocative efficiency?
a. a perfectly competitive market system
b. a purely command economic system
c. a market system with limited price controls and price ceilings
d. a command system with limited market activity for non-essentials
a
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Use the following graph, which shows the market for euros, to answer the next question.
Assume the United States and European governments adopt a system of flexible exchange rates. If currency traders think the European economy will experience a recession and the U.S. economy will not, this will most likely cause ________.
A. the euro to depreciate B. the U.S. dollar to depreciate C. the supply of euros to decrease D. the euro to appreciate
To a firm in perfect competition, price and marginal revenue are equal
Indicate whether the statement is true or false
In a market in which the government has set a price ceiling below the equilibrium price:
A. the quantity demanded will equal quantity supplied. B. there will be excess supply. C. quantity supplied will exceed quantity demanded. D. a black market might develop.
According to the liquidity preference model, if the interest rate rises above its equilibrium value, the quantity demanded of nonmonetary interest-bearing financial assets _____, and this leads to a _____ in the interest rate.
A) decreases; rise B) increases; fall C) decreases; fall D) increases; rise