The idea that the desires of resource suppliers and firms to further their own self-interest will automatically further the public interest is known as:
A. Consumer sovereignty
B. The invisible hand
C. Derived demand
D. Creative destruction
Answer: B
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According to the purchasing power parity theory, which of the following is most likely to affect exchange rates?
a. differences in inflation rates b. differences in interest rates c. differences in income levels d. differences in real GDP growth rates
When oligopoly firms collude to raise prices,
A. Each firm benefits, but society loses. B. Only the price leader benefits while other firms and society lose. C. Both the colluding firms and society benefit. D. Everyone is eventually a loser.
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
Which of the following is not considered investment?
A. the construction of a new factory B. the purchase of government bonds C. the acquisition of capital goods D. the increase in planned inventories