How do modern markets differ from other economic systems in their capacity to produce “growth miracles”?
What will be an ideal response?
While other societies have had spectacular invention records, none can be compared with the success of the industrialized market economies when it comes to their ability to generate the kind of sustained rapid growth we have seen in the last 200 years. Although influences such as political changes, religious beliefs, and historical accidents have surely contributed to this growth, two features of market economies seem to be key: free competition and the use of innovation by firms to compete with their rivals.
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Most economists believe there are four reasons the CPI overstates the true inflation rate. List and briefly explain these four reasons
What will be an ideal response?
Too much of society’s scarce resources are used to produce goods in monopoly markets.
Answer the following statement true (T) or false (F)
Which of the following has occurred as a consequence of the Airline Deregulation Act of 1978?
a. Through mergers, airlines have formed an international cartel to restrict the number of flights and thus have successfully raised airline fares above the (inflation-adjusted) levels observed prior to deregulation. b. By 2000, airline fares were about 27 percent lower (in inflation-adjusted dollars) than before deregulation began, and there was a considerable increase in numbers of people flying. c. Deregulation weakened the power of airlines and strengthened the power of airline labor unions. Thus the Air Line Pilot's Association union was able to negotiate higher wages and a shorter work-month. d. Accident rates increased by 10 percent to 45 percent, depending on the specific measures used.
Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10 years, your deposit in Bank C equals ________, while your deposit in Bank S equals ________.
A. $1,791; $2,000 B. $1,600; $2,594 C. $1,600; $2,000 D. $1,060; $1,100