Adam Smith used the metaphor of the "invisible hand" to explain how:
A. markets mismatch buyers and sellers.
B. business owners are benevolent.
C. people acting in their own self-interest promote the interest of society as a whole.
D. the production possibilities frontier illustrates efficient outcomes.
Answer: C
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In markets free from intervention, prices tend to move towards equilibrium because of
A) the "helping hand" of government. B) increased demand from buyers. C) increased supply by sellers. D) the unintended consequences of choices among buyers and sellers pursuing their own plans.
The intersection of the aggregate demand and the aggregate supply curve defines the equilibrium level of _____ and the price level
a. real interest rate b. nominal interest rate c. nominal GDP d. real GDP e. unemployment
To some economists, the "Great moderation" means:
a. a small change in real wages. b. a low inflation rate. c. a low unemployment rate. d. low output growth variability. e. low money supply growth.
Given a set amount of money, goods A and B both give the same marginal utility at current levels of consumption but good A costs twice as much as good B. You should:
A. realize that you don't have enough information to answer the question. B. consume more of good B and less of good A. C. consume more of good A and less of good B. D. keep consuming the current amounts of both good A and good B.