According to Adam Smith, the "invisible hand" refers to which of the following?
a. Government interference in markets to prevent greed.
b. 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).
c. The "best interest of society," (public interest) will occur as an outcome of careful guidance by government authorities in allocating scarce goods and services according to private interest.
d. Bribes and graft that interfere with the market process.
b
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In its simplest form, purchasing power parity would mean that a good in one country
A) would have the same exchange-rate adjusted price in another country. B) will be available for sale in another country. C) will reflect the exchange rate in another country. D) will reflect the transportation cost differences in another country.
Suppose you borrow $5,000 at an interest rate of 8%. If the expected real interest rate is 3%, then the rate of inflation over the upcoming year that would be most beneficial to you would be
A) 0%. B) greater than 0% but less than 5%. C) equal to 5%. D) greater than 5%.
Aluminum Aces dumps wastewater into a creek they have owned for decades. The new neighbor, Ms. Franklin, has tried to grow bamboo along the creek where it enters her property, but the wastewater kills about $1,000 worth of her bamboo each year. She offers Aluminum Aces $600 per year to add a new filter, which costs $400, to their system so wastewater will no longer kill her bamboo. What is one way this case exemplifies the Coase theorem?
a. One party gains at the other’s expense. b. Property rights are questionable. c. A negative externality is internalized. d. Transaction costs are high.
If the CPI in 2015 was 104 and the CPI in 2016 was 106, then the rate of inflation between 2015 and 2016 was
A. 1.89%. B. 1.92%. C. 2.0%. D. 2.2%.