What two important functions are performed by the price system?
What will be an ideal response?
(1.) The price system is an automatic mechanism for distributing goods and services.
(2.) The price system determines the allocation of resources among producers and the final mix of outputs.
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In the Baumol-Tobin analysis of transactions demand for money, either an increase in ________ or a decrease in ________ increases money demand
A) income; interest rate B) interest rates; brokerage fees C) brokerage fees; income D) interest rate; income
If there are ten firms in a market and each has an equal market share, the Herfindahl-Hirschman Index (HHI) is ________.
A) 10,000 B) 1,000 C) 100 D) 1,500
Investment will increase if business taxes ____, real interest rates ____, or if business confidence ____
a. increase, increases, increases b. decrease, decrease, decreases c. increase, increases, decreases d. decrease, decrease, increases
The stock market provides two functions for corporate financing: reducing investors' risk and setting the prices of stocks
a. True b. False Indicate whether the statement is true or false