What Is a Primary Function of Prices in a Market

question 149

Multiple Choice

What is a primary function of prices in a market economy?

• A) to provide participants with economic information
• B) to provide participants with spending limits
• C) to provide participants with accounting capabilities
• D) to provide participants with an equitable distribution of goods

---

Definitions:

Futures Price

The agreed-upon price for the future exchange of an asset; a financial contract specifying the price at which an asset, often a physical commodity or a financial instrument, will be bought or sold at a future date.

Spot Price

The current market price at which a particular asset, such as a commodity, security, or currency, can immediately be bought or sold.

Interest Rate Futures

Futures contracts that speculate on the future value of interest rates, allowing investors to hedge or speculate on changes in interest rates.

Initial Margin

The minimum amount of funds required to open a new position in a market, serving as a security deposit to cover credit risk.