Why does scarcity lead to the what, how, and for whom questions?
What will be an ideal response?
Human wants exceed the resources available to satisfy them, thereby creating the problem of scarcity of goods and services. Everyone wants more than he or she can have, be it a student dreaming of a faster computer or an extraordinarily rich business leader wishing for more vacation time. Because not all wants can be satisfied, people must make choices about which wants to satisfy. The choices resulting from scarcity mean that people must decide what gets produced, how are the products produced, and for whom are the products produced.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
International financial flows changed in meaningful ways, and these changes were brought to the attention of policy makers by the Asian financial crisis. Describe three changes
What will be an ideal response?
One mechanism through which increasing public debt may impact the economy is that the resulting
A) increased competition for funds increases interest rates and causes a reduction in investment. B) increased competition for funds decreases interest rates and causes an increase in investment. C) decreased competition for funds decreases interest rates and causes a reduction in investment. D) decreased competition for funds decreases interest rates and causes an increase in investment.
In a market economy, supply and demand are important because they
a. play a critical role in the allocation of the economy's scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct.