Why does even a free market economy need some government intervention?
a. to provide for things that the marketplace does not address
b. to ensure that the government has the freedom to tax as necessary
c. to make sure that the government can fulfill its needs for military personnel
d. so that the government has some control over factor resources
Answer: to provide for things that the marketplace does not address.
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For the U.S. federal government, discretionary expenditures refer to
A) spending on entitlement programs. B) spending on imports and exports. C) spending on interest on federal debt. D) spending that must be authorized by Congress each year.
Exchange rates determined by the forces of demand and supply are called
a. fixed exchange rates. b. floating exchange rates. c. equilibrium exchange rates. d. dirty exchange rates.
Investment in capital goods only makes sense when
a. the capital goods can be used to increase the future output of consumption goods. b. the savings rate of a country is low. c. the interest rate is high and people have a positive rate of time preference. d. economies are organized along capitalist lines.
The small-country monopolist's free-trade equilibrium features a marginal revenue curve equal to __________ and coincident with _____________.
a. marginal cost; the consumer's demand curve for the product b. the world price; the new competitive demand curve for the firm c. one; profits d. imports at each price; the supply curve