The Three Fundamental Economic Questions of What, How, and for Whom

question 4

Multiple Choice

The three fundamental economic questions of what, how, and for whom:

• A) exist because of scarcity.
• B) are much more serious in a socialist system.
• C) are not serious in a capitalistic system.
• D) are not relevant in the industrialized world of today.

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Definitions:

Investment

The purchase of new plants, new equipment, new buildings, and new residences, plus net additions to inventories.

Nominal GDP

The total market value of all goods and services produced in a country in a given period, measured using current prices without adjusting for inflation.

Current-Year Prices

Prices of goods and services measured during the same year they are produced, not adjusted for inflation; also referred to as "nominal prices."

GDP Price Index

A measure of the change in prices of all new, domestically produced, final goods and services in an economy.