About the Price System, Friedrich Hayek Wrote, "I Have Deliberately

question 275

Multiple Choice

About the price system, Friedrich Hayek wrote, "I have deliberately used the word 'marvel' to shock the reader out of the complacency with which we often take the working of this mechanism for granted. I am convinced that if it were the result of deliberate human design . . . this mechanism would have been acclaimed as one of the greatest triumphs of the human mind." He means that:

• A) people have a hard time seeing how important the price system is because no one designed it.
• B) the price system was deliberately designed by the human mind.
• C) the price system is widely regarded as an important invention.
• D) the mechanism does not work very well.

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Definitions:

Reversing Entries

Entries recorded at the start of a new accounting cycle to negate or annul the effects of adjustments entered at the conclusion of the prior cycle.

Wages Expense

This is the total amount of money paid to employees for work performed during a specific period.

Payroll

The total amount of money paid by a business to its employees over a set period, including wages, salaries, bonuses, and deductions.

Retained Earnings

The portion of net income that is not distributed as dividends to shareholders but is kept by the company for reinvestment or to pay off debt.