How does private ownership and a competitive market affect the efficiency of economic organization?
Private ownership of resources, including a person's own labor resources, provides an incentive to use those resources productively and efficiently. People are simply more productive with, and take better care of, things that they own. In addition, competitive markets provide an outlet for that production. Competition provides both an incentive and a mechanism for firms to produce the goods society most desires and to produce them at a low cost.
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Which part of the Federal Reserve System holds reserves of the member banks?
A. The Federal Advisory Committee B. The Federal Open Market Committee C. The Board of Governors D. The 12 Federal Reserve Banks
Suppose demand increases and supply decreases. Which of the following will happen?
What will be an ideal response?
A country's nominal exchange rate, e, is defined as the number of units of:
A. the domestic currency that one unit of the foreign currency will buy. B. the foreign currency that one unit of the domestic currency will buy. C. domestic goods relative to the number of units of foreign goods. D. foreign goods relative to the number of units of domestic goods.