Which of the Following Is True of an Economy That

question 255

Multiple Choice

Which of the following is true of an economy that operates entirely through central planning?

• A) An individual's success in business is based on political savvy rather than economic profitability.
• B) There is relative ease in matching resource allocation to consumer demand by the central planners.
• C) Central planners receive market information and coordinate economic activity through the price mechanism.
• D) The system adapts easily to technological change, because there is a healthy entrepreneurial spirit.

---

Definitions:

Effective Annual Rate

The interest rate on an investment or loan that reflects the actual annual rate of interest, accounting for compounding over a given period.

Semi-Annual Interest Payments

Interest disbursements made twice a year on a loan or bond.

Coupon

The interest payment a bondholder receives from the bond's issuer at the coupon's interval.