Adam Smith's invisible hand principle stresses
a. that benevolence is a powerful motivator that encourages individuals to engage in productive economic activity.
b. the tendency of the competitive market process to direct self-interested individuals into activities that enhance the economic welfare of society.
c. the potential of government regulation as a means of bringing the self interest of individuals into harmony with the economic welfare of society.
d. the tendency of self-interested individuals to pursue activities that benefit themselves but harm the overall economic welfare of society.
B
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If labor and capital are complements in production, then an increase in the amount of capital will
a. reduce the firm's demand for labor. b. raise the firm's marginal cost of production. c. cause the scale effect to outweigh the substitution effect. d. increase labor's marginal product.
When output is above the full employment level of real GDP, the Federal Reserve banks should ________.
A. lower the federal funds rate B. buy bonds C. raise the discount rate D. lower the reserve ratio
If the price of the good described in Exhibit 4-1 is $1.60, then an economist would expect the
a. price to decrease to $1.40 b. price to decrease to $1.50 c. quantity supplied to increase to 50 units d. quantity demanded to increase to 80 units e. quantity demanded to increase to 90 units
Which statement is true?
A. Both craft and industrial unions are organized along the lines of particular skills. B. Neither craft nor industrial unions are organized along the lines of particular skills. C. Craft unions—but not industrial unions—are organized along the lines of particular skills. D. Industrial unions—but not craft unions—are organized along the lines of particular skills.