Explain why Adam Smith believed that competitive markets are a key component of achieving the gains from the invisible hand.
What will be an ideal response?
Adam Smith believed that individuals acting in their own self-interest would end up acting in society’s best interest. This process is borne out by competition, in which firms pursuing maximum profit end up producing a good at the lowest possible AC and selling it at a price equal to the minimum LRAC.
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Government purchases in national income accounts would include payments for ________.
A. unemployment benefits B. salaries for current U.S. military officers C. public assistance for welfare recipients D. Social Security checks to retirees
If a bank has deposits worth $800,000 . total reserves worth $800,000 . and the reserve ratio of 0.20, what is the value of excess reserves?
a. $620,000 b. $1,000,000 c. $1,160,000 d. $640,000 e. $160,000
A perfectly inelastic supply curve is vertical
a. True b. False Indicate whether the statement is true or false
Other things the same, an increase in the U.S. interest rate causes U.S. net capital outflow to
a. rise, so supply in the market for foreign-currency exchange shifts right. b. rise, so demand in the market for foreign-currency exchange shifts right. c. fall, so supply in the market for foreign-currency exchange shifts left. d. fall, so demand in the market for foreign-currency exchange shifts left.