Which of the following represents key strengths of the market economy as a system of allocation?
a. Goods and services are allocated based on willingness and ability to pay, rather than based on need.
b. Producers have strong incentives to innovate because successful innovators are rewarded with higher profit.
c. Since price is freely set based on supply and demand, shortages and surpluses are minimized.
d. Both b. and c. above are correct.
d
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Alexis de Tocqueville observed in his Democracy in America: "There is no country in which everything can be provided for by the laws, or in which political institutions can prove a substitute for
A) common sense and morality." B) economic development." C) police and prisons." D) supply and demand." E) the private pursuit of private interests."
If inflation is higher than expected, then borrowers make nominal interest payments that are less than they expected
a. True b. False Indicate whether the statement is true or false