According to Adam Smith, the "invisible hand" refers to which of the following?
a. The "best interests of society (public interest) will occur as an outcome of the market process coordinating the self-interested interactions of buyers and sellers (private interest).
b. Government interference is the invisible hand of inefficiency.
c. Bribes and graft is the invisible hand of inefficiency.
d. The "best interests of society" will occur as an outcome of careful guidance by government authorities in allocating scarce goods and services.
a
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Carefully explain if the following statements are true, false, or uncertain
a. If average cost is increasing, marginal cost must be increasing. b. If there are diminishing returns, the marginal cost curve must be positively sloped. c. Marginal costs decrease as output increases because the firm can spread fixed costs over more units.
Which of the following will be most likely to dampen the expansionary effects of an increase in government spending financed by borrowing?
a. The budget deficit will cause business decision makers to become more optimistic. b. The increase in demand for loanable funds as the result of borrowing will cause interest rates to rise and private investment to fall. c. The increase in government spending will cause the money supply to expand, thereby causing an inflationary boom. d. The additional borrowing will cause the central bank to buy more bonds, which will reduce aggregate demand.
In 2007, investment in France increased by 7 billion euros. Which of the following occurs?
I. an upward shift in the AE curve II. a leftward shift in the AD curve III. an increase in the price level and real GDP in the short run IV. an increase in the price level and no change in real GDP in the long run. a) I, II, III, & IV b) I & III only c) I, II, & IV only d) III & IV only
Between 1999 and 2007, after NAFTA had been in operation for some time,
A. U.S. exports to Mexico increased, but U.S. imports from Mexico increased even more. B. total U.S. imports increased, but total U.S. exports increased even more. C. U.S. imports from Mexico fell, but U.S. exports to Mexico fell even more. D. total U.S. exports fell, but total U.S. imports fell even more.