An Economic System in Which Relative Prices Change to Reflect

question 347

Multiple Choice

An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a

• A)socialist system.
• B)communist system.
• C)queuing system.
• D)market system.

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Definitions:

Treasury Bills

Short-term government securities issued at a discount from the face value and mature in a year or less, representing a secure, low-risk investment.

Net Present Value

A valuation method that calculates the present value of expected future cash flows minus initial investment, used to assess investment opportunities.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, under which the payments are directed to a special post office box instead of the company’s corporate address.

Money Market Securities

Short-term financial instruments, typically liquid and with high credit quality, traded in the money market involving assets like treasury bills, commercial paper, and certificates of deposit.