Which of the following statements about free-market economies is false?
A)An efficiently functioning market economy will correct temporary shortages and surpluses.
B)Markets tend to be impersonal and to decentralize economic power.
C)The government has a role to play in correcting market failures.
D)In a free-market economy there is no role for government intervention.
E)The existence of profits and losses provides signals to other economic agents.

Question

Quizplus · Accepted Answer

In reality, there is almost no such thing as a "pure" free-market economy without any government intervention. All economies have some level of government involvement, whether it be through regulations, taxes, subsidies, or other means. The extent of government intervention may vary among different countries and time periods, but the idea that a free-market economy has no role for government intervention is false.

Which of the Following Statements About Free-Market Economies Is False