Which of the Following Would Indicate That Markets Are Operating

question 1

Multiple Choice

Which of the following would indicate that markets are operating efficiently?

• A) Consumer sovereignty is being achieved
• B) Firms are making a high level of profits
• C) There is a constant rise in the money value of goods and services
• D) Incomes are distributed equally across all people

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Definitions:

Fiat Money

Currency that a government has declared to be legal tender, despite it not having intrinsic value or being backed by physical reserves such as gold or silver.

T-Account

A graphical representation of a general ledger account that highlights the debit and credit sides.

Required Reserve Ratio

The fraction of deposits that regulators require a bank to hold in reserve and not lend out.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank or other governing bodies.