The market and public sector are similar in that
A) there is competition among the participants in both sectors.
B) the resources used in both sectors are scarce.
C) the participants in both sectors react to incentives.
D) All of the above are true.
Answer: D
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In a world where people would have no prior information about where they are in an income distribution, given the choice, Rawls argues that they would prefer
a. an income distribution that is relatively equal b. that everyone has the same work opportunities and then let incomes be what the market generates c. to rely on their abilities so accept high levels of income inequality d. that private property be transformed to government property to safeguard their incomes e. less economic assistance to the poor because it distorts the price system
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and current international transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and current international transactions become more negative (or less positive). b. The real risk-free interest rate rises, and current international transactions become more negative (or less positive). c. The real risk-free interest rate and current international transactions remain the same. d. The real risk-free interest rate rises, and current international transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.