In a Market Economy

question 111

Multiple Choice

In a market economy,

• A) there is not a fixed economic pie to be divided among individuals, but rather income is created by the individuals who earn it.
• B) differences in incomes provide individuals with an incentive to supply resources that are highly valued by others.
• C) a person's income is determined by the quantity and value of the resources that they supply to the market.
• D) all of the above are true.

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Definitions:

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, income, employment, and other indicators.

Investment

The allocation of resources, such as capital or time, into something with the expectation of generating income or profit in the future.

Consumption

The action of using goods and services for personal needs or wants.

Annual Variations

Fluctuations in economic indicators or values that occur on a yearly basis due to various factors such as seasonal patterns or cyclical trends.