In General (And in the Absence of Market Failures), Economic

question 7

Multiple Choice

In general (and in the absence of market failures) , economic surplus will be maximized and economic efficiency will be achieved

• A) when consumers and producers can agree on the most advantageous division of economic surplus.
• B) when the government is able to impose an equilibrium price.
• C) when resources are allocated such that production of the good is maximized.
• D) in a competitive market where price is free to achieve its market- clearing equilibrium level.
• E) when the government successfully determines what is best for society as a whole.

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Definitions:

Travelers Checks

Preprinted, fixed-amount checks designed to allow the person signing them to make payments or exchange for local currency, used mainly by travelers to protect against theft or loss.

M1 Balance

The most liquid components of the money supply, including physical currency, demand deposits, and other assets that can quickly be converted to cash.

Currency

A form of currency widely accepted in a specific nation or economic setting.

Measure Of Value

A standard of value that allows the worth of various goods and services to be compared; often associated with money as a common denominator for value comparison.