When the price system fails to generate an efficient allocation of resources
A. too few or too many goods will be produced.
B. consumers will spend less.
C. the market will always correct it.
D. business will produce more.
Answer: A
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Refer to Scenario 2. By examining the t-statistics associated with the regression coefficients, at the 5 percent significance level, which of the two independent variables are statistically different from zero?
What will be an ideal response?
An increase in population growth will lead to a ________ in the steady-state capital—labor ratio and a ________ in output per worker
A) fall; fall B) fall; rise C) rise; rise D) rise; fall
In an open economy with flexible exchange rates, monetary policy affects consumption and investment by changing the ________ and affects net exports by changing the ________.
A. real interest rate; exchange rate B. exchange rate; real interest rate C. growth of domestic real GDP; growth of foreign real GDP D. inflation rate; unemployment rate
Keynes believed that during an economic downturn, firms would ________ because consumers would ________.
A. hire more workers; increase their spending B. lay off workers; spend too much C. hire more workers; decrease their spending D. have no incentive to hire workers; spend too little