According to the theory of the invisible hand, if buyers and sellers are free to pursue their own self-interest, the result often will be:
A. an equitable allocation of resources.
B. an incomplete allocation of resources.
C. an efficient allocation of resources.
D. the exploitation of productive resources.
Answer: C
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Welfare payments _____
a. often increase the marginal cost of being employed b. often decrease the marginal cost of being employed c. have led to a tremendous decline in poverty since 1968 d. have no relationship to the marginal cost of being employed
Cost-benefit principles can be applied to the decision of:
a. profit-maximizing firms. b. majority-rule voting. c. which project receives the most votes. d. rational ignorance. e. all of these.
On a graph with consumption on the vertical axis and disposable income on the horizontal axis, the slope of the line is
a. greater than one. b. equal to one. c. less than one. d. undefined.
To eliminate an inflationary gap, the aggregate demand curve should
A. shift outward. B. become vertical. C. become horizontal. D. shift inward.