The task of deciding which consumer gets each of the goods produced in a free-market economy is solved by
A. the price system.
B. the industries that produce the goods.
C. the central planners.
D. citizens with political power.
Answer: A
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In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)
A) T - G - TR B) Y - C - T + TR C) Y - G - T D) Y - C - T
Inflation
a. hurts society by imposing additional opportunity costs b. is generally harmful, but has the benefit of reducing opportunity costs c. makes it easier for us to comparison shop d. benefits society by causing people to make use of resources that would have otherwise gone to waste e. benefits society because by making people better consumers, they start to buy only those consumer goods they really need
If you hear an economist argue that the economy does not experience business cycles but merely experiences variations in economic activity over time, you know that economist belongs to the school of
a. real business cycle theory b. Keynesian economics c. production possibilities growth theory d. accelerator cycle theory e. capital-based, long run growth theory
Refer to the accompanying figure, which shows the market for cups of coffee. Consider the original supply and the original demand curve. If the government imposes a price ceiling of $1.00 on a cup of coffee, then there would be:
A. a short-term excess demand for coffee, followed by an increase in the equilibrium price. B. an excess supply of coffee. C. a new equilibrium at a price of $1.00 per cup and a quantity of 50 cups per hour. D. an excess demand for coffee.