Question

1. The basic idea of Adam Smith’s “invisible hand” is that:

1. Dire poverty and income inequalities are inevitably a part of a free market.
2. The pursuit of private interests by individuals and firms can lead to socially desirable ends.
3. There is a force inherent in government with seeks to achieve social usefulness.
4. Population increase is an important determinant of a country’s development.
5. A free, competitive economy cannot allocate resources efficiently without government planning.

2. The purpose of an economic model is to:

1. Set the prices in a price system.
2. Manage the economy like an automatic pilot.
3. Demonstrate which values and beliefs are best for the economy.
4. Make predictions about the real world
5. Be a complex, exact replica of reality

3. Economic analysis is primarily concerned with the way resources are:

1. Aggregated.
2. Calculated.
3. Annotated.
4. Distribute
5. Collected.

Answer 1