What, according to economist Donald Boudreaux in the "Last Word" section of the chapter, best explains why the market system is not a random, chaotic mess?
A. There is active cooperation among private property owners and government officials to correct the excesses of a market economy
B. The roundabout methods of production allocate resources from consumers to producers in an orderly fashion
C. Government planning limits the chaos, and the government regulates economic activity to create stability in the market
D. Private property rights encourage mutual accommodation that leads to an arrangement of resources that is productive
Answer: D
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In the ________ increases in the supply of money will ________
A) long run; lead to lower prices B) short run; raise total demand and output C) long run; raise total demand and output D) short run; decrease total demand and output
Which of the following would you expect to increase the equilibrium interest rate?
A) an increase in the budget deficit B) a decrease in the profitability of investment projects firms are considering C) a change from an income tax to a consumption tax D) an increase in the percentage of income after net taxes that households save Figure 21-1