Which of the Following Best Summarizes the Essence of the Invisible

question 56

Multiple Choice

Which of the following best summarizes the essence of the Invisible Hand Theorem?

• A) Competitive markets guarantee that any shortages or surpluses existing in an economy will be quickly eliminated.
• B) Of all the possible economic systems,competitive markets are the most philosophically compatible with democracy and freedom.
• C) Within competitive markets,people who selfishly pursue their own interests end up achieving a socially desirable outcome.
• D) The social gain created by competitive markets is second only to what a hypothetical benevolent dictator could achieve.

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Definitions:

Total Taxable Income

The portion of one's income that is subject to taxation, after all deductions and exemptions are factored in.

Interest Income

Earnings from bank accounts, loans, or investments, often subject to income tax.

Form 1040EZ

A simplified U.S. federal income tax form for taxpayers with basic tax situations, now superseded by Form 1040.

Tax Deduction

An allowable reduction from gross income that decreases taxable income and reduces the amount of tax owed.