Which of the following correctly explains the role of the government in a free market?
A) The government acts as a referee by enforcing contracts and preventing stealing.
B) The government sets prices according to the relative value of each good.
C) The government allocates goods to those buyers who value the goods the most.
D) The government sets production quotas for sellers in the market.
A
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In the short run,
a. spending determines income, but not the other way around b. income determines spending, but not the other way around c. spending determines the interest rate, but not the other way around d. spending determines income, and income determines spending e. spending determines the productivity, and productivity determines spending.
Scarcity
a. necessitates choice among consumer goods. b. of income renders purchase decisions interdependent. c. affects all consumer decisions. d. may involve forgoing the pleasure of one good in order to enjoy another. e. All of the above answers are correct.