The Private Ownership of Property Resources and Use of Prices

question 16

Multiple Choice

The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:

• A)a command system.
• B)a market system.
• C)communism.
• D)socialism.

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Definitions:

Real Exchange Rate

A measure that compares the relative price of a basket of goods in two different currencies, adjusted for inflation.

Surplus

The amount by which the quantity of a product or service available exceeds the quantity demanded at the current price.

Shortage

A situation in which quantity demanded is greater than quantity supplied.

Purchasing-Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, suggesting that exchange rates should adjust so that identical goods cost the same in different countries.