Which of the Following Is True

question 89

Multiple Choice

Which of the following is true?

• A) There is a fixed size of economic pie available for the government to allocate among individuals.
• B) In a market economy, the link between productivity and income provides individuals with an incentive to provide resources that are highly valued by others.
• C) Taxes and transfers do not affect the amount of income that is created.
• D) How income is distributed exerts little impact on the total amount of income generated.

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Definitions:

Organic

Pertaining to or derived from living organisms, in food production referring to practices that do not use synthetic pesticides or fertilizers.

Profit

The profit achieved when the revenue generated from a business operation surpasses the expenses, costs, and taxes needed to maintain the operation.

External Effects

Also known as externalities, these are positive or negative consequences of economic activities experienced by unrelated third parties.

Highly Differentiated

Products or services that are distinct and stand out from those of competitors because of features, quality, or design.