The market mechanism:
a) Works through central planning by the government.
b) Is very inefficient since consumers cannot communicate directly with producers.
c) Uses prices as a means of communication between consumers and producers.
d) Eliminates market failures created by the government.
Answer: c) Uses prices as a means of communication between consumers and producers.
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
A poor person in the United States has ________.
A. a higher per capita real income than the average poor person in the world B. a lower per capita real income than the average poor person in the world C. the same per capita real income as the average poor person in the world D. the same per capita real income as the average poor person in the world, but has a lower standard of living
The excess supply curve of a product we (H) import from foreign countries (F) increases as
A) excess demand of country H increases. B) excess demand of country F increases. C) excess supply of country H increases. D) excess supply of country F increases. E) excess supply of country F decreases.
Which of the following would be considered part of the underground economy?
a. tips reported to the IRS by a waitress b. a barber giving a person a haircut in exchange for a meal c. income earned through selling shares of stock d. the portion of a professional athlete's salary that is economic rent e. donations received by a local church in their collection plate on Sunday morning