Markets allocate resources efficiently when Adam Smith's "invisible hand" is allowed to work freely. Which of the following statements is true?
a. Unrestrained, competitive markets can accomplish optimal resource allocation through the invisible hand - the competitive price system.
b. Mandatory controls that lower prices below equilibrium improve economic welfare by making the product cheaper and promote the efficient use of resources.
c. The "visible hand" of government planners provides transparency to markets and thus improves outcomes.
d. Increased competition from medical travel, domestic or international, does harm to patients who do not have the ability to travel for care.
e. Government regulation is essential for market outcomes to maximize consumer welfare.
a. Unrestrained, competitive markets can accomplish optimal resource allocation through the invisible hand - the competitive price system.
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The slope of the aggregate supply curve shows that, all else the same, the
A) quantity of real GDP supplied increases as the price level increases. B) price level remains constant as potential GDP increases. C) price level remains constant as real GDP increases. D) quantity of real GDP supplied remains constant as the price level increases. E) quantity of real GDP supplied decreases as the price level increases.
Purchasing power parity means equal rates of return
Indicate whether the statement is true or false
Lessons that economists and policy makers have learned from the recent global financial crisis include
A) Developments in the financial sector have a far greater impact on economic activity than was earlier realized. B) The zero lower bound on interest rates can be a serious problem. C) The cost of cleaning up after a financial crisis is very high. D) Price and output stability do not ensure financial stability. E) All of the above.
Suppose the rate of inflation in a country increases from 4% to 8% within a few months. This will cause: a. the demand curve for the currency to shift to the right
b. the demand curve for the currency to shift to the left. c. an upward movement along the demand curve for the currency. d. an upward movement along the supply curve for the currency.