The Substantivist Approach in Economics Differs from the Formalist View

question 27

Multiple Choice

The substantivist approach in economics differs from the formalist view by __________.

• A) suggesting that money is the prime mover in all economic systems
• B) focusing on supply and demand economics as opposed to price fixing
• C) maintaining that the ways of allocating goods and services in small-scale societies differ fundamentally from those of large-scale Western economic systems
• D) assuming that all peoples act to maximize their individual gains

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Definitions:

Potential GDP

The maximum possible level of output an economy can achieve when all resources are utilized efficiently, without causing inflation.

Prices

The amount of money required to purchase goods or services, acting as a signal in the market to influence supply and demand.

Natural Level of Employment

The rate of employment where the labor market is in equilibrium, with no cyclical unemployment.

Prolonged Unemployment

Prolonged unemployment refers to an extended period during which an individual remains jobless despite actively seeking employment, often leading to significant economic and psychological consequences.