Voluntary exchange increases economic efficiency
A) because neither the buyer nor the seller would agree to a trade unless they both benefit.
B) because voluntary exchange only takes place with government permission.
C) because it allows wealthy individuals to act altruistically and give to the poor.
D) because it is free and consequently does not cost anything.
A
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The short-run aggregate supply curve shows the relationship between
a. the general level of prices and the quantity of goods and services purchased by all consumers in the economy. b. the general level of prices and the quantity of goods and services that domestic firms will supply. c. the interest rate and the quantity of goods and services that domestic firms will supply. d. the money supply and the quantity of goods and services that domestic firms will supply.
The economy’s self-correcting mechanism
A. tends to push unemployment toward a specific point called the natural rate of unemployment. B. works better at correcting inflationary gaps than recessionary gaps. C. cannot work if the Phillips curve is vertical. D. ensures that the economy will not have to endure a long period of high unemployment.