In What Ways Can It Be Argued That There Is

question 16

Multiple Choice

In what ways can it be argued that there is a good 'fit' between democracy and a market economy? Please select all that apply.

• A) Political stability
• B) Business has a political voice
• C) The rule of law
• D) Changes of government can lead to changes in economic policy

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Definitions:

Loanable Funds

The money available for borrowing in the financial markets, corresponding to savings that are lent out for investment.

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for ease of spending but are willing to accept less liquidity for a higher return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage rate.

Money Demand Curve

A graph showing the relationship between the quantity of money people want to hold and the interest rate, inversely related.