The invisible hand principle indicates that competitive markets can help promote the efficient use of resources
a. only if buyers and sellers really care, personally, about economic efficiency.
b. even if business firms fail to produce goods efficiently.
c. even when market participants care only about their own self interests rather than about the overall efficiency of resource use.
d. if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely.
c. even when market participants care only about their own self interests rather than about the overall efficiency of resource use.
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Suppose a basket of goods costs $400 in the United States and £200 in Britain. If the exchange rate is $1/pound, what will happen in the foreign exchange market, according to the purchasing power parity theory?
a. The market will go further out of equilibrium because of increased activity. b. An increase in demand for pounds will lead to an increase in the price of pounds. c. An increase in demand for dollars will lead to an increase in the price of dollars. d. An increase in demand for dollars will lead to a decrease in the price of dollars. e. An increase in demand for pounds will lead to a decrease in the price of pounds.
The Yankee Candle Company, in Hatfield, Massachusetts, makes scented candles. When strawberry-scented candles are made, townspeople enjoy the scent that covers the town. When potpourri-scented candles are made, people stay indoors to avoid the scent. We can infer that if the scented-candle markets are in equilibrium
a. neither strawberry nor potpourri scented candles will be produced b. strawberry candles' prices are higher than the socially optimum c. potpourri candles' prices are higher than the socially optimum d. candle production generates only negative externalities e. candle production technologies are inefficient
An open-market purchase by the Federal Reserve creates an excess _____ of money. This causes interest rates to _____ and investment to _____. The change in investment causes aggregate demand to shift to the _____
Fill in the blank(s) with correct word
Rent seeking is the actions of
A) individuals and groups who spend resources to influence public policy in the hope of redistributing income to themselves from others. B) a subset of the population that hold intense preferences for a particular government service. C) some citizens who choose not to acquire information because the costs of acquiring the information are greater than the benefits. D) politicians who exchange votes to gain support for their own legislation.