According to your text, the "market economy" can best be understood as
A) an institution created by British merchants around the time of Smith's Wealth of Nations.
B) an extremely complex institution that emerged out of individuals specializing and trading among each other.
C) an institution unique to America.
D) an institution that could not exist in the absence of regulation.
B
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If a state requires all drivers to purchase auto insurance, insurance companies still face the problem of
A) sunk costs. B) excess demand for their insurance. C) correctly pricing their insurance. D) adverse selection.
If inflation was 3 percent last year and 2 percent this year, an individual who follows extrapolative expectations would predict that the inflation rate for the coming year would be:
A. 1 percent. B. 0 percent. C. 3 percent. D. 5 percent.