Define free markets. Does a perfectly competitive market qualify ...

[debasdf]

Define free markets. Does a perfectly competitive market qualify as a free market?
 
  What will be an ideal response?

Question 2

Fiscal policy to solve short-run economic problems supports the Keynesian notion of
 
  A) there being no government role in the economy. B) the need for autocratic rule.
  C) an active government role in the economy. D) the long-run nature of the economy.

[Jane]

Answer to Question 1

A free market can be defined as a market structure where all exchanges are voluntary. There is very little government control or coercion in the market and the government does not tell market participants what to do. In a perfectly competitive market, the equilibrium price and quantity are determined through the forces of demand and supply, and without any government intervention. Hence, perfectly competitive markets qualify as free markets.

Answer to Question 2

C