Voluntary exchange between buyers and sellers generates ________ in a market economy
A) scarcity
B) allocative efficiency
C) productive efficiency
D) equity
Answer: B
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Which of the following is not included in the sum of national income?
A. Interest B. Rent C. Depreciation or consumption of fixed capital D. Profits and losses
Why does the quantity demanded decrease when the price of a good increases?
A. People choose to reduce consumption of the item. B. People “drop out” of the market for the item. C. People find substitutes for the item. D. All of these responses are correct.
In the early 1980s, the disinflation in the United States
a. was accompanied by rapidly growing deficits. b. was costless in terms of output and employment effects. c. was the result of a well-publicized expansionary monetary policy. d. did not result in a severe recession.
Suppose a U.S. resident buys a car from a car maker in Japan. This transaction will:
a. have a negative effect on Japan's balance of trade in merchandise. b. have a negative effect on the U.S. balance of trade in merchandise. c. have a positive effect on the U.S. balance of trade in merchandise. d. bring money into the United States. e. have no effect on Japan's balance of trade in merchandise.