Question 3
Financial InstitutionsThe downturn in the prices of shares on stock markets is a highlight of
- A.efficient allocation of resources
- B.the invisible hand
- C.the regulatory nature of the market
- D.consumer rationality.
Show the answer and explanation
Answer: C (the regulatory nature of the market)
Explanation
A sharp fall in share prices shows that markets can fail and need regulation by bodies such as the Securities and Exchange Commission.