Market signals will help to allocate capital efficiently only if investors are acting ________.

Question

Quizplus · Accepted Answer

Market signals can only be effective in allocating capital efficiently if investors are making decisions based on accurate information. If investors are relying on their individual hunches or being directed by financial experts, the market signals may not reflect the true state of the economy and capital may be allocated inefficiently. Additionally, if investors are dominant forces in the economy and are making decisions that do not reflect the interests of other participants, the market signals may not accurately reflect the needs of the economy.

Market Signals Will Help to Allocate Capital Efficiently Only If