Describe the invisible hand theory.
What will be an ideal response?
each individual increases the nation's material wealth using individual interests, talents, and abilities to serve consumers in the market
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The market demand curve shows how the quantity demanded of a product, during a specified time period, changes as the price of that product changes.
Answer the following statement true (T) or false (F)
Which of the following is not a market failure?
a. A lack of competition in some markets. b. Prices determined in competitive markets, which consumers, as individuals, have no control over. c. The presence of externalities in some markets. d. A lack of public goods desired by a majority of citizens. e. Income inequality.
Both a perfectly competitive firm and a monopolist:
A. always earn an economic profit. B. maximize profit by setting marginal cost equal to marginal revenue. C. maximize profit by setting marginal cost equal to average total cost. D. are price takers.