Which of the following represents key strengths of the market economy as a system of allocation?
a. Goods and services are allocated based on willingness and ability to pay, rather than based on need.
b. Producers have strong incentives to innovate because successful innovators are rewarded with higher profit.
c. Since price is freely set based on supply and demand, shortages and surpluses are minimized.
d. Both b. and c. above are correct.
d
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The largest proportion of the U.S. public debt is held by
A. the Federal Reserve System. B. the U.S. public (individuals, businesses, financial institutions, and government). C. U.S. government agencies. D. foreign individuals and institutions.
If the money wage rate increases, then the
A) aggregate supply curve shifts rightward. B) potential GDP increases. C) potential GDP decreases. D) aggregate supply curve shifts leftward. E) aggregate demand curve shifts leftward.
Federal funds rate targets and reserve targets are incompatible when the Federal Reserve wants to
A) expand reserves and lower interest rates. B) expand reserves and raise interest rates. C) contract reserves and the money supply. D) contract reserves and raise interest rates.
An increase in the price of pizza will shift the demand curve for pizza to the left
a. True b. False Indicate whether the statement is true or false