Sound Economic Policy Is Policy That Is Consistent with

question 11

Multiple Choice

Sound economic policy is policy that is consistent with

• A) good intentions.
• B) quick action and frequent policy changes until positive results are achieved.
• C) monetary stability, free trade, and low tax rates.
• D) saving jobs, protecting domestic industry, and increasing tax revenue.

---

Definitions:

Pure Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit from the market.

Long-run Adjustments

Changes a firm or industry makes over a long period to adapt to changes in demand, technology, or other economic factors.

Allocative Efficiency

Occurs when resources are distributed in a way that maximizes the net benefit to society, with goods and services produced at the level where the last unit provides a benefit equal to its cost of production.

Purely Competitive Industry

An industry characterized by many sellers offering identical products where each seller is a price taker due to market forces.