In a Market Economy

question 18

Multiple Choice

In a market economy,

• A) there is a fixed economic pie to be divided among individuals.
• B) differences in incomes provide individuals with an incentive to supply resources that are highly valued by others.
• C) a central distributing agency carves up the economic pie and allocates slices to individuals.
• D) both a and b above are true.

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Definitions:

Available-For-Sale Securities

Debt or equity securities not classified as held-to-maturity or trading securities, measured at fair value with changes recognized in other comprehensive income.

Realized Gain

is the profit made from selling an asset at a higher price than its purchase cost, officially recognized once the transaction is completed.

Fair Value

The value obtained for disposing of an asset or incurred in transferring a liability during a regulated deal among market entities on the date of measurement.

Net Income

The amount of profit left after all operating expenses, taxes, and interest are paid, indicating a company's financial performance over a specific period.