The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.
a. true
b. false
Answer: a. true
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Assume the economy is in short-run equilibrium at a real GDP below its potential real GDP. According to Keynesian theory, which of the following policies should be followed?
a. The Federal Reserve should increase the money supply b. The federal government should increase spending. c. The federal government should do nothing because the economy will self correct to potential real GDP. d. All of the above.
Adam Smith listed three types of motives for people holding money?transaction, precautionary, and speculative
a. True b. False Indicate whether the statement is true or false
Policymakers are discussing various proposals regarding how to deal with natural monopolies. Senator Huff wants to regulate natural monopolies by equating price with average total cost. Huff contends that such a policy will ensure that monopolies make every effort to reduce costs. Senator Puff wants the government to own natural monopolies. Puff argues that government-owned monopolies usually do
a better job of holding down costs than privately owned monopolies. Which senator's argument is correct? a. Senator Huff b. Senator Puff c. both senators d. neither senator
An imperfectly competitive firm faces a demand curve that is:
A. downward-sloping. B. perfectly inelastic. C. more than perfectly elastic. D. perfectly elastic.