Suppose you came across the following headline in a story of a daily newspaper: "Automobile prices are so high right now that there must be a shortage. As a consequence not everyone who needs an automobile will be able to buy one"
Is this statement necessarily correct?
First of all we have to conclude that all buyers who wish to buy automobiles at the prevailing prices will be able to do so. There will of course be others who are simply unwilling or unable to pay the current price. Secondly, we cannot say that there is a shortage at the current price. If there were then the price would simply rise to choke off the excess demand.
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The repurchase agreement market was an important ingredient of the Great Recession because:
a. It is the market on which mortgages are repurchased, and, due to the Great Recession, this market dried up. b. It is the market on which many companies finance their daily working capital needs and, due to the Great Recession, this market dried up. c. Many repurchase agreements were with subprime mortgages, and few investors would purchase them. d. All of the above.
Which statement best describes a capitalist economy?
a. The production and allocation of goods and services is determined primarily through government b. The production of goods and services is determined primarily by markets, but the allocation of goods and services is determined primarily by government c. The production of goods and services is determined primarily by government, but the allocation of goods and services is determined primarily by markets d. The production and allocation of goods and services is determined primarily through markets