When the theory of mercantilism was superseded by the theory of "classical liberalism" of Adam Smith around the time of the American Revolution,
(a) the colonies had shifted toward laissez faire, governmental noninvolvement in the private economy, but the new nation rejected the philosophy of laissez faire.
(b) governmental involvement in the private economy persisted in both the colonies and the new nation; the U.S. Constitution adopted the common law from England which sanctioned certain types of governmental involvement.
(c) governmental involvement had already been largely abandoned in the colonies and laissez faire was officially adopted by the new nation.
(d) government involvement was strong down to the time of the Revolution; it was then abandoned and laissez faire was enshrined in the Constitution and became part of the law of the land.
(b)
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Gains from trade can only occur when
A) marginal rates of substitutions differ across people. B) marginal rates of substitution are equal across people. C) indifference curves are convex. D) people find themselves on the contract curve.
In the presence of no externalities
A) social marginal cost exceeds private marginal cost. B) social marginal cost is less than private marginal cost. C) social marginal cost equals private marginal cost. D) social marginal cost and private marginal cost cannot be compared.
According to the natural rate hypothesis, the unemployment rate should equal 0 percent in the long run
a. True b. False Indicate whether the statement is true or false
In explaining internally induced cycles, changes in investment and changes in national income are
a. independent of each other b. mutually reinforcing c. unrelated to the income multiplier d. rarely moving in the same direction e. dependent on changes in population