Which of the Following Statements Most Accurately Identifies a Serious

question 32

Multiple Choice

Which of the following statements most accurately identifies a serious limitation of the free-market economic system?

• A)Free-market economies have been unable to create wealth as rapidly as other types of economic systems.
• B)Free-market economies offer little opportunity for the poor to work their way out of poverty.
• C)Free-market economies result in a very unequal distribution of wealth.
• D)Free-market economies often are plagued by shortages of needed consumer goods.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Capital Expenditures

Money spent by a firm on buying or improving hard assets such as land, factories, or equipment.

Revenue Expenditures

Expenses that are immediately charged against revenues in the same accounting period, generally related to the maintenance and repair of fixed assets or operating expenses.

Accounting System

A methodical procedure of recording, measuring, and communicating financial information for decision making in business.