"The Market Is Not a Self-Regulating Mechanism Because Prices Are

question 2

Multiple Choice

"The market is not a self-regulating mechanism because prices are not flexible and nothing ensures that planned leakages will be offset by planned injections. To bring the economy out of depression and end high unemployment, some way of stimulating aggregate demand is required. This can be best achieved by a combination of government deficit spending and regulation of tax rates." Which school of thought does this statement best represent?

• A) Utopian economics
• B) Monetarist economics
• C) Classical economics
• D) Keynesian economics
• E) Marxist economics

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Definitions:

Private Enterprise System

A private enterprise system is an economic system where private individuals or businesses own and operate the means of production and distribution of goods and services.

Fair Competition

refers to a marketplace where businesses operate under rules that prevent monopolies and ensure equal opportunities for all participants.

Factor Payment

Financial compensation given to the factors of production—namely labor, capital, and resources.

Rent

A payment made by a tenant to a landlord for the use of a property or space.