CHAPTER 2 The Market System and the Circular Flow

A.

The profit and loss system

B.

The "invisible hand"

C.

Taxes and subsidies

D.

Consumer sovereignty

A.

Profit-sharing agreements

B.

Wage contracts

C.

The Social Security program

D.

Paid vacation leaves

A.

Access to the firm's profits and gains are open only to those who take on the business risk of the firm

B.

Those who receive guaranteed payments from the firm are also guaranteed a share of the firm's profits

C.

Those who make bad decisions regarding risk will suffer losses; those who decide wisely will gain profits

D.

Those who bear the business risk of the firm are guaranteed to always gain profits

A.

Those who deeply dislike business risk will not have anything to do with the business

B.

This allows firms to more easily attract labor and other suppliers of inputs

C.

This reduces the business risk in the economy

D.

It makes it easier for the government to monitor and manage the business risk

A.

Those who have a low-risk tolerance to those with high risk-tolerance

B.

Those who have a high-risk tolerance to those with low risk-tolerance

C.

The insurance companies' owners to the insurance-policy holders

D.

Insurance policyholders to the bankers who lend money to the companies