Adam Smith's notion of the invisible hand served as the foundation of
a. mercantilist thought.
b. the philosophy of protectionism.
c. the liberal economic thought of the nineteenth century
d. the neo-Marxian tradition.
e. none of the above.
C
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Which of the following most clearly states the "paradox of thrift"?
a. If households simultaneously attempt to increase their savings, the result may be a reduction in demand, output, and total savings. b. A strong, healthy economy can be achieved if most households are heavily in debt. c. A high savings rate will provide the funds for investment, which is a driving force of long-term economic growth. d. A reduction in savings and an increase in consumption will expand output and employment.
In a market system:
A. firm owners and employees share business risk more or less equally. B. a firm's employees and suppliers are largely shielded from risk. C. employees and suppliers face the greatest risks because firms can shut down without notice and leave them unpaid. D. a firm's owners are largely shielded from risk because they can walk away from the business at any time.