Do Markets Solve All of Society's Problems

question 28

Multiple Choice

Do markets solve all of society's problems?

• A)Yes, markets are efficient and work well under nearly all circumstances.
• B)Yes, markets solve the problems of production and distribution.
• C)No, they do not solve problems such as unemployment and inflation.
• D)No, they hardly solve any problems at all.
• E)Uncertain, economic theory has no answer to this question.

---

Definitions:

Frictional Unemployment

Refers to people who are between jobs or just entering or reentering the labor market.

Rate of Inflation

The percentage increase in the price level of goods and services in an economy over a period of time.

Misery Index

An economic indicator created by adding the unemployment rate to the inflation rate, meant to represent the average citizen's economic well-being.

Unemployment Rate

The segment of the labor force that is currently jobless and engaging in job-seeking activities.